By The Securities and Exchange Commission of the United States has terminated its investigation into Robinhood Markets Inc (NASDAQ: HOOD). Shares of the fintech are inching up in premarket today.
The company’s crypto business had been under investigation for potential violation of the securities law since May of 2024.
On Monday, its chief legal officer, Dan Gallagher said:
Robinhood has and will always respect federal securities laws and never allowed transactions in securities. We’re happy to see a return to the rule of law and commitment to fairness at the SEC.
HOOD shares are still down close to 20% versus their year-to-date high.
What Robinhood news means for crypto industry
SEC’s dismissal of the crypto case against Robinhood is another sign the Trump administration is fully committed to regulatory clarity and pro-crypto policies in 2025.
Just last week, the US regulator dropped its enforcement case against HOOD’s rival Coinbase Global Inc (NASDAQ: COIN) as well.
As the new Securities and Exchange Commission continues to abandon its “bogus cases” against crypto companies, it will create a “domino effect” that will benefit crypto stocks at large, Brian Armstrong – the chief executive of COIN said at the time.
While meaningful, the announcement failed to reflect in Coinbase stock last week.
Shares of the crypto giant closed about 7.0% down on Friday – but are inching up again at writing.
HOOD relies heavily on crypto trading revenue
The US regulator agreeing to terminate its investigation into Robinhood Crypto is a significant development considering the Nasdaq-listed firm generates most of its revenue from that segment.
In its latest reported quarter, HOOD’s crypto trading revenue soared about 700% on a year-over-year basis to more than triple the company’s transaction-based revenue to $672 million.
Much of that strength was related to a sharp rally in the price of Bitcoin following Trump’s victory against Kamala Harris in Presidential Elections 2024.
Bitcoin rallied from about $70,000 in early November to a peak of $109,000 mid-December on the back of Republicans’ return to power in 2025.
Should you invest in Robinhood stock today?
The SEC news arrives only days after Bank of America analysts reiterated their “buy” rating on Robinhood stock.
They raised their price target on the financial technology company as well to $65 that indicates potential for a more than 20% upside from current levels.
The investment firm expects pro-crypto policies and regulatory certainty to drive a meaningful increase in crypto trading volumes in 2025.
Bank of America also raised its earnings per share estimates not just for the company’s current quarter, but the next year, and 2027 as well.
That said, Robinhood Markets remains unattractive for those interested in setting up a new source of passive income as it’s not a dividend stock.
The post SEC drops crypto case against Robinhood appeared first on Invezz
