Robinhood plans to buy cryptocurrency exchange BitStamp to expand its crypto business internationally, despite increasing regulatory scrutiny at home.
Financial services company said on Thursday he will buy BitStamp for $200 million in cash to help him expand his crypto business globally. Founded in Slovenia in 2011, BitStamp has a strong international presence and has over 50 active licenses to operate around the world. Most of the company’s revenue comes from Europe.
“The acquisition of Bitstamp is an important step in the development of our crypto business. Bitstamp, a globally trusted exchange with a long history, has demonstrated resilience through market cycles,” Johann Kerbrath, general manager of Robinhood Crypto, said in a statement.
While Robinhood sets its sights on foreign countries, regulatory troubles are brewing at home. Last month, the Securities and Exchange Commission sent the company a notice to Wells, notifying it that the regulator could take legal action following a “preliminary finding” that Robinhood violated securities laws. Wells’ notice does not necessarily mean the SEC will file a lawsuit, but it is a step regulators take before deciding whether to move forward with formal enforcement proceedings. The company has a chance to explain to regulators why it should not pursue enforcement action within 30 days. The Securities and Exchange Commission (SEC) is weighing the reaction when making its final decision. Robinhood’s pending acquisition of BitStamp likely won’t matter to the SEC since BitStamp’s operations are primarily overseas.
“We firmly believe that the assets listed on our platform are not securities, and we look forward to working with the SEC to clarify how weak any case against Robinhood Crypto would be, both as a matter of fact and as a matter of law. “, Robinhood is responsible for compliance and corporate affairs. officer Dan Gallagher said in May. statement.
In this statement, the company stated that it is conservative regarding the types of tokens it lists on its platform. It said it also shies away from offering products targeted by the SEC, such as lending and “staking,” where cryptocurrency holders can earn rewards by staking a portion of their cryptocurrency to validate transactions on certain blockchains that use “proof of stake.” ” The SEC is suing the largest US crypto exchange Coinbase as it claims the exchange offered unregistered securities through its staking rewards program.
With the acquisition of BitStamp, Robinhood will introduce its first institutional business. It will also move into betting and lending overseas, despite limiting itself to the US.
The Securities and Exchange Commission (SEC), under the chairmanship of Gary Gensler, has waged a decades-long campaign against cryptocurrencies, with mixed results. Although Gensler scored some legal victories For crypto players, he faced a setback 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 the financial instruments have seen billions of dollars in inflows in just a few months.
Despite the SEC’s warning, Robinhood is promoting cryptocurrency for good reason. Crypto transactions generated $126 million in revenue in the first quarter, up from $38 million in the same period last year, according to quarterly earnings. Cryptocurrency was the company’s second-largest source of revenue after options trading in the first quarter.
Robinhood shares were trading up 1.45% at $23 as of Thursday afternoon after the acquisition was announced.