Even though regulators are taking a hard look at these companies, the stock market might be largely looking past fears of a crackdown for now.
(ticker: HOOD), which counts crypto as an important part of its retail investor-focused trading platform, disclosed in filings Monday that it had received a subpoena from the Securities and Exchange Commission. The SEC’s investigative subpoena regarded Robinhood’s cryptocurrency listings, its custody of digital assets, and platform operations, among other things, the company disclosed.
The December subpoena came “shortly after FTX filed for bankruptcy on November 11, 2022, and following the bankruptcies of several other major cryptocurrency trading venues and lending platforms earlier in 2022,” Robinhood said, naming hedge fund Three Arrows Capital and lenders
and Celsius Network.
The stock market, for its part, seems to be shrugging. Robinhood stock jumped 3.5% on Tuesday, while shares in rival
—a completely crypto-focused broker—surged 11%. The
by comparison, has inched up just 0.3% in Tuesday trading.
The outperformance is particularly interesting to see in Coinbase, which is crypto-native and completely devoted to the digital asset space. While Robinhood doubled down on crypto through the last bull market—and even through much of 2022, introducing new services amid cascading prices—digital assets are not a core part of the broker’s business, which remains dominated by options.
Advertisement – Scroll to Continue
Coinbase, too, is increasingly reliant on diversification into businesses like stablecoins and interest-bearing “staking” services, which the SEC has specifically targeted at competitors like Paxos and Kraken. Coinbase itself has disclosed scrutiny from the SEC in the past year, and fears of wider industry crackdown have grown since FTX’s collapse.
Nevertheless, with gains in Robinhood and Coinbase accelerating on Tuesday, investors may not just be looking past regulatory scrutiny but cheering the stocks on.
Write to Jack Denton at jack.denton@barrons.com
