Trading App Robinhood Issues Warning About Crypto Regulation Hurting Their Business Model
Trading app giant Robinhood is issuing a warning about the potential damage future crypto regulations could do to its business.
In an amendment to an S-1 Form filed with the U.S. Securities and Exchange Commission (SEC), the financial services company lays out the numerous risks related to its cryptocurrency products and services.
Some of those risks involve the haziness surrounding what future industry regulations might look like, according to Robinhood.
“The regulatory landscape involving cryptocurrencies is constantly evolving and [Robinhood Crypto] may be subject to fines, penalties, or loss of regulatory licenses if the SEC or any other regulators issue new regulations or interpretive guidance related to cryptocurrencies that prohibit any of our current business practices.”
Customers began testing cryptocurrency wallets on Robinhood this month. In September, the trading platform rolled out a new feature that allows crypto investors to buy digital assets commission-free on a recurring basis.
In the SEC filing, Robinhood notes that it can’t guarantee that the company’s wallets will be protected. The trading platform says it holds the “overwhelming majority” of its crypto in storage, but also uses wallets to support day-to-day operations.
“We cannot provide assurance that any or all of our wallets will not be hacked or compromised such that cryptocurrencies are sent to one or more private addresses that we do not control, which could result in the loss of some or all of the cryptocurrencies that RHC holds in custody on behalf of customers. Any such losses may be significant, and we may not be able to obtain insurance coverage for some or all of those losses.”
In January, Robinhood restricted its customers from buying crypto altogether, citing “extraordinary market conditions.” The firm also halted users from buying shares in Gamestop (GME), which rapidly rose in price after a flurry of retail trading buzz on Reddit.
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Author: Daily Hodl Staff
