Crypto Trading Plunges on Robinhood Amid Regulatory Challenges
Robinhood, a well-known trading platform, has reported a significant decrease in cryptocurrency trading volume for the month of May. According to the company, the crypto trading volume dropped to $2.1 billion, which is a 43% decline from April, and a staggering 68% fall on a yearly basis.
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One of the metrics that Robinhood uses to gauge performance is Daily Average Trading Revenue (DART), which measures the average trade per day that generated commissions or fees. DART for cryptocurrency trading was down 22% in May and 53% compared to the previous year.
Robinhood also announced that it has recently delisted three tokens, namely Cardano's ADA, Polygon's MATIC, and Solana's SOL. This decision came after these tokens were classified as securities by the U.S. Securities and Exchange Commission (SEC) in lawsuits filed against Coinbase and Binance. As a result, the number of cryptocurrencies available for trading on Robinhood has been reduced to 15.
Robinhood has been keen on complying with regulatory requirements. The company's chief compliance lawyer, Dan Gallagher, stated that Robinhood had attempted to register as a special-purpose broker for digital assets in 2021, but was not successful in doing so.
Coinbase and Binance have been subject to lawsuits earlier this month, accused of violating U.S. securities laws. Meanwhile, Robinhood has not been directly targeted by a lawsuit, but it did receive an investigative subpoena from the SEC regarding its cryptocurrency operations, as disclosed in its 10-K filing in February.
This decline in crypto trading volume on Robinhood reflects the ongoing challenges and regulatory scrutiny that trading platforms are facing in the cryptocurrency market. The evolving regulatory landscape may continue to impact crypto trading volumes and the availability of tokens on platforms like Robinhood.
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