Robinhood Ceases Support for 3 Tokens Mentioned in SEC Lawsuits

Robinhood, a popular cryptocurrency and stock trading app, recently announced its decision to discontinue support for Cardano, Polygon, and Solana, which have been labeled as unregistered securities by the United States Securities and Exchange Commission (SEC). The move came in light of the SEC’s legal actions against two major crypto exchanges, Coinbase and Binance. In a June 9 update, Robinhood indicated that it would discontinue support for these three currencies beginning June 27, attributing the delisting to the “cloud of uncertainty” brought about by the lawsuits initiated by the SEC against Coinbase and Binance. Notably, these were the only three tokens involved in the cases that Robinhood supported.

Expressing their commitment to the future of cryptocurrencies, Robinhood emphasized their advocacy for regulatory clarity in the United States. The company believes that greater regulatory clarity will instill confidence among customers and enable them to actively participate in the cryptocurrency marketplace. Earlier in the week, the SEC filed lawsuits against Coinbase and Binance, alleging that several cryptocurrencies traded on these platforms were unregistered securities. Among the tokens specifically mentioned by the SEC were Cardano, Polygon, and Solana, all of which were supported by Robinhood.

The SEC’s legal actions have generated significant backlash from the crypto community, as users point out inconsistencies in the regulator’s treatment of digital asset firms. For instance, the lawsuit against Coinbase accuses the exchange of operating as an unregistered security broker since 2019, despite the fact that the company went public in April 2021. Moreover, Binance.US and its CEO, Changpeng Zhao, were also named in the SEC’s cases, implicating them in alleged unregistered offers and sales of tokens, including BNB. In response to the SEC’s “extremely aggressive and intimidating tactics,” Binance.US announced on June 8 that it would suspend U.S. dollar deposits.

During a congressional hearing on June 6, former SEC commissioner and Robinhood’s chief legal compliance and corporate affairs officer, Dan Gallagher, testified about the challenges faced by crypto firms in operating as registered broker-dealers in the U.S. He compared the process to “crypto the hard way” and highlighted the difficulty in complying with the SEC’s requirements, even when Robinhood made efforts to register as a special purpose broker-dealer. Despite undergoing a 16-month registration process, the company was informed in March that it would not reap the benefits of its endeavors.

The actions taken by Robinhood and other crypto platforms reflect the escalating tension between regulatory bodies like the SEC and the rapidly evolving cryptocurrency industry. While market participants and investors seek clarity and consistency in regulations, the current landscape remains complex and uncertain, prompting companies to navigate these challenges and advocate for a more transparent regulatory framework.