Robinhood, a popular trading platform, has reported a significant surge in crypto trading volumes during the first quarter of this year. The volumes have increased by 224% and reached a total of $36 billion. This growth has played a crucial role in driving the company’s transaction-based revenue up by 59% compared to the previous year, reaching $329 million. The revenue generated from crypto alone has seen a remarkable rise of 232% to $126 million, according to Robinhood’s recent report.
The increase in crypto trading volumes on Robinhood’s platform is not surprising, as other publicly traded crypto peers, like Coinbase, have also reported impressive performances in the first quarter due to the improving conditions in the crypto market.
Furthermore, Robinhood has announced that it holds $26.2 billion in users’ crypto assets under custody as of March 31, which marks a significant 78% increase from the end of 2023. These figures demonstrate the growing interest and participation in cryptocurrencies among Robinhood’s user base.
The positive performance in crypto trading has significantly contributed to Robinhood’s overall financial success for the first quarter. The company has exceeded expectations by reporting $618 million in revenue, surpassing analyst estimates of $552.7 million. Additionally, Robinhood’s earnings for the quarter stood at $0.18 per share, exceeding the average analyst expectation of $0.06.
Following the release of these impressive financial results, shares of Robinhood have seen a post-market trading increase of approximately 7%, while Coinbase shares have experienced a slight decline. Year-to-date, Robinhood’s stock has risen by about 40%, while Coinbase has gained 22%.
However, amidst the positive news, Robinhood has recently disclosed that it has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) regarding its crypto unit. A Wells Notice informs the recipient that the regulator has concluded an investigation against them and plans to file an enforcement action.
Although the notice is disappointing for Robinhood, the company’s CFO, Jason Warnick, has emphasized that it will not impact customer accounts or affect the operations of the crypto arm. Warnick also highlighted that Robinhood has been conservative in its approach and has applied the same legal and compliance standards to its crypto operations as it does to its brokerage.
The SEC’s decision to issue a Wells Notice to Robinhood Crypto has been criticized by the crypto trade association Digital Chamber, which has called it an “alarming development.” The Digital Chamber believes that this is another example of the regulator’s “unchecked regulatory overreach,” similar to previous instances involving major industry players like Uniswap and Consensys.
Other legal experts in the crypto industry have also expressed concerns over the SEC’s multiple Wells Notices. Jake Chervinsky, Chief Legal Officer of Variant Fund, took to Twitter to express his dismay over the SEC’s enforcement intentions.
Despite these regulatory concerns, Robinhood’s impressive financial results in the first quarter indicate the platform’s success and the growing interest in cryptocurrencies among its users.