Vlad Tenev, the CEO of Robinhood, has become Wall Street’s latest power player to criticize the wave of enforcement action notices that have been sent by the Securities and Exchange Commission (SEC).
Last Friday, the retail trading platform disclosed that it had gotten a Wells Notice from the regulatory body.
This is essentially a notice sent by the agency to warn companies, or individuals, about upcoming enforcement action.
The Statement
According to Robinhood Crypto, the SEC had previously scrutinized its crypto custody practices and token listings.
Tenev took to X to blast the regulator, saying that its continued attack on the industry and the recent rule proposals was just another attempt to stifle innovation in the country.
He said that the regulatory onslaught of the agency had hamstrung American investors and companies significantly.
The SEC has sent similar warnings to Uniswap Labs, the company behind decentralized platform Uniswap, and Ethereum giant Consensys.
Now, it appears that Robinhood is a target in the crosshairs, even though it is not a crypto-native firm.
Robinhood’s Background
It was in 2018 when Robinhood first began to offer Bitcoin and Ethereum to its clients via its app. Over the years, the company has cautiously expanded its offerings via its crypto arm.
Last year, Dan Gallagher, the Chief Legal, Compliance, and Corporate Affairs Officer, had testified before lawmakers on Capitol Hill.
He disclosed that the company uses a ‘safety-first’ approach when it comes to its choices, which includes not offering customers any products related to crypto staking or lending.
The former involves investors delegating their crypto tokens to a network and getting rewards. He said that the company had opted to take a conservative approach, unlike its competitors.
He said that while competitors offered hundreds of digital assets on their platform, Robinhood had only 18 tokens listed and had not added ‘digital asset securities’.
Regulatory Clarity
Last year, after the SEC sued Coinbase and Binance, Robinhood Crypto ended support for tokens on its platforms that had been declared as securities by the SEC.
The US users of the company were no longer able to trade altcoins, such as Solana (SOL), Polygon (MATIC), and Cardano (ADA).
Gallagher had been an SEC commissioner from 2011 to 2015. He said in his testimony that the lack of regulatory clarity surrounding crypto needed to be addressed.
He said that this was essential to stop companies from worrying about enforcement action from the SEC, which could be crippling.
Regulatory hurdles are not a new occurrence for Robinhood Crypto. In 2022, the New York Department of Financial Services (NYDFS) penalized the company.
It had been charged with alleged compliance failures related to its transaction monitoring and cybersecurity practices and the company settled the charges with a payment of $30 million.
In 2020, the company also agreed to pay $65 million to settle charges brought by the SEC about the misleading statements that had been made to investors.
A $70 million fine had also been imposed in 2021 by the Financial Industry Regulatory Authority due to the significant and widespread harm to customers.