Robinhood plans to purchase crypto exchange BitStamp to expand its crypto business internationally, at the same time as the corporate faces increasing regulatory scrutiny at home.
The financial services company said Thursday It would buy BitStamp for $200 million in money to expand its crypto business globally. Founded in Slovenia in 2011, BitStamp has a robust international presence with greater than 50 energetic licenses to operate worldwide. The majority of the corporate’s revenue comes from Europe.
“The acquisition of Bitstamp is an important step in expanding our crypto business. Bitstamp’s highly trusted and long-standing global exchange has proven resilient through market cycles,” said Johann Kerbrat, general manager of Robinhood Crypto, in an announcement.
While Robinhood sets its sights abroad, trouble with regulators is brewing at home. Last month, the Securities and Exchange Commission sent the corporate a Wells Notice informing it that the regulator may file suit following a “preliminary determination” that Robinhood had violated securities laws. The Wells Notice doesn’t necessarily mean the SEC will file a lawsuit, but it surely is a step regulators take before deciding whether to initiate official enforcement proceedings. The company has 30 days to clarify to regulators why it shouldn’t initiate enforcement proceedings. The SEC is weighing the response to make its final decision. Robinhood’s impending acquisition of BitStamp likely won’t be relevant to the SEC because BitStamp conducts most of its operations abroad.
“We firmly believe that the assets listed on our platform are not securities, and we look forward to working with the SEC to make clear how weak a case against Robinhood Crypto would be on both the facts and the law,” Dan Gallagher, Robinhood’s compliance and company affairs officer, said in a May opinion.
In that statement, the corporate claimed it had been cautious in selecting the sorts of tokens it listed on its platform. It said it had also shied away from offering products the SEC has targeted, reminiscent of lending and “staking,” where crypto owners can earn rewards by staking a portion of their cryptocurrencies to confirm transactions on certain blockchains that use “proof of stake.” The SEC is suing the most important crypto exchange within the U.S., Coinbase, alleging that the exchange offered unregistered securities through its staking rewards program.
With the acquisition of BitStamp, Robinhood will launch its first institutional business and may also enter staking and lending overseas, although it’s going to be limited to the US.
The SEC under its chairman Gary Gensler has been waging a campaign against cryptocurrencies for years, with mixed results. Although Gensler some legal successes He suffered a setback against crypto players when a judge ruled in August that the SEC had improperly rejected crypto asset manager Grayscale’s application to create a spot bitcoin ETF. The SEC approved several spot bitcoin ETFs in January, and in only a number of months, the financial vehicles have amassed billions of dollars in inflows.
Despite the SEC’s warning, Robinhood has been pushing cryptocurrencies for good reason. Crypto transactions brought in $126 million in revenue in the primary quarter, in comparison with $38 million in the identical period last 12 months, in keeping with quarterly results. Cryptocurrencies were the second-biggest revenue driver for the corporate in the primary quarter, after options trading.
Following the announcement of the acquisition, Robinhood shares were trading 1.45% higher at $23 on Thursday afternoon.
