SEC’s Crypto Task Force rapidly checking off boxes to end former cases — first Coinbase, now Robinhood

Robinhood announced the SEC had dropped its investigation into Robinhood Crypto and does not intend to “move forward with an enforcement action.” (Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company.) The move comes a few days after the SEC dropped its case against Coinbase, the largest US crypto platform. 

This latest development underscores a major shift from the “regulation by enforcement” approach the former administration (and former SEC Chair Gary Gensler) took with the crypto industry. Earlier this month, current head of the SEC’s Crypto Task Force, Hester Peirce, wrote about the “crypto road trip” the agency has embarked on, and followed it on February 21 with a post likening the past regulatory environment to an escape room and that it was now “time to help open the door.”

In the announcement, Dan Gallagher, chief legal, compliance, and corporate affairs officer at Robinhood Markets, said:

“We applaud the staff’s decision to close this investigation with no action. Let me be crystal clear — this investigation never should have been opened. Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities.”

Last May, the SEC sent the company a Wells notice, which is “a notification from a regulator that it intends to recommend that enforcement proceedings be commenced against the prospective respondent,” as SEC Law explains.

The company said at the time that it had received subpoenas regarding its crypto listings, custody of crypto, and platform operations, regulatory filings showed.

For Patrick Gerhart, president of banking operations for Telcoin, this was a case in point of the SEC’s overreach in the crypto sector. 

“The SEC closing the report on Robinhood is long overdue,” he said. “Hopefully, the SEC will now focus on clear and concise regulatory insight for the industry. Thus bringing in more transparency to the crypto realm. We are more than willing to work with the regulators hand in hand moving forward.”

Yaël Bizouati-Kennedy is a financial journalist who’s written for Dow Jones, The Financial Times Group, and Business Insider.