- Crypto firms see SEC as “profoundly evil,” says expert.
- Bitstamp acquisition shows how political winds are changing in the US.
Robinhood says its $200 million purchase of Bitstamp is part of a plan to broaden its crypto business to institutional investors.
Experts say it’s more than that. It’s also taking a strong stand against the US Securities Exchange Commission.
“It’s an indication that the industry feels that the political winds are shifting in Washington,” Sean Tuffy, a former regulation banker with Citigroup, told DL News.
“Firms are increasingly confident that the SEC’s anti-crypto campaign is running out of steam and are willing to continue to expand its offerings.”
Robinhood bought Bitstamp just weeks after the online brokerage disclosed that the SEC had recommended proceeding with an enforcement action against the company over its crypto business.
Instead of baulking at the SEC notice, Robinhood is committing even more resources to crypto, suggesting that the SEC is losing some of its influence over the industry.
Legal battle
The move comes as SEC Chair Gary Genler suffers defeat after defeat in his legal battle against crypto players. Where they once shook in fear, executives now shrug.
“Many crypto companies view the SEC as profoundly evil at this point and not only don’t take them seriously, but see them as an active obstacle to protecting their customers,” Austin Campbell, professor at Columbia Business School and founder of Zero Knowledge Consulting, told DL News.
Robinhood will now attempt a tried-and-true industry strategy: turning to the courts for clarity.
A key court win for Grayscale in 2023, for example, spurred the SEC to review its Bitcoin ETF application, paving the way for a slew of ETF approvals in January.
Gautam Chhugani, a Bernstein analyst, said Robinhood is pursuing a similar strategy for listing tokens on exchanges.
“Robinhood is willing to fight the SEC in the court,” Chhugani told DL News. “That’s the opportunity, right? The fact that they will seek regulatory clarity through the court process.”
With most of Bitstamp’s revenue coming from Europe, buying the crypto exchange is also a serious bet on international expansion far beyond the SEC’s jurisdiction.
The deal is expected to close in the first half of 2025.
Liam Kelly is a Berlin-based DL News’ correspondent. Contact him at liam@dlnews.com.