Stock trading app Robinhood is expanding its presence in the cryptocurrency sector with the acquisition of cryptocurrency exchange Bitstamp.
Robinhood will buy Bitstamp in a deal valued at $200 million, which will allow the app to serve institutional clients in the United States.
The transaction, which is subject to regulatory approval, is expected to be completed in the first half of 2025.
The decision to buy the exchange was due to customers wanting more and more cryptocurrency products, Johan Kerbrat, chief executive of Robinhood Crypto, told the Wall Street Journal, according to a June 6 report:
“Everything we’ve done over the last few years has been because we’ve been engaging with customers because they want more crypto products.”
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Robinhood expands its cryptocurrency offering despite regulatory pressure
Robinhood has been expanding its cryptocurrency offerings since at least 2018, when it began offering Bitcoin (BTC) and Ether (ETH) trading to users.
The acquisition of Bitstamp will allow Robinhood to leverage its institutional offerings, including institutional lending and staking, as well as Bitstamp’s white-label solution as a service.
The deal represents an important development for the growth of Robinhood’s cryptocurrency offerings, according to Kerbrat, who wrote:
“Bitstamp, the long-standing and highly trusted global exchange, has demonstrated resilience throughout market cycles. By seamlessly combining customer experience and security across geographies, the Bitstamp team has built one of the strongest reputations among retail and institutional cryptocurrency investors.
Founded in 2011, Bitstamp has over 50 active regulatory licenses and registrations worldwide. Bitstamp will continue to operate under its own brand, despite the upcoming acquisition.
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Will the SEC sue Robinhood?
The acquisition comes despite potential legal issues facing Robinhood in the United States.
On May 4, Robinhood received a Wells Notice from the United States Securities and Exchange Commission (SEC). The Wells Notice is a letter sent by the securities regulator concluding its investigation into the defendant, in this case the American cryptocurrency company Robinhood.
According to the filing, the SEC investigated Robinhood’s cryptocurrency listings and cryptocurrency custody operations and made a “preliminary determination” to recommend that the SEC take enforcement action related to the alleged securities violations. movable.
The potential legal action came despite Robinhood’s attempts to register with the U.S. securities regulator, according to Dan Gallagher, Robinhood Markets’ director of legal, compliance and corporate affairs.
Gallagher wrote in a blog post on May 6:
“After years of good faith attempts to work with the SEC to clarify the regulations, including our well-known attempt to ‘go and register,’ we are disappointed that the agency has decided to issue a notice to the Land of Wales regarding our cryptocurrency activities in the United States. »
Wells’ opinion does not necessarily indicate that the SEC will pursue Robinhood. The stock trading platform said it will continue to cooperate with the securities regulator to avoid any potential violations.
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