Trading giant, Robinhood, has announced its decision to acquire crypto exchange, Bitstamp, for about $200 million in cash. This deal is Robinhood’s largest one ever, and the company’s shares went up by 3.4% before the market opened, reflecting bullish investor sentiment.
Also Read: How to transfer crypto from Coinbase to Robinhood
Robinhood’s crypto division played a crucial role in helping the company exceed its first-quarter profits target in May. However, it also disclosed that it received a Wells notice from the U.S. Securities and Exchange Commission (SEC) over tokens traded on its platform.
Robinhood wants to expand its product offerings
Robinhood has stated that it aims to expand its product offerings to become a full-fledged financial services provider. Acquiring Bitstamp, a company founded in 2011 and holding 50 active licenses globally, puts Robinhood in direct competition with big names like Binance and Coinbase. Bitstamp’s spot exchange is popular in Europe and Asia and has over 85 tradable assets, which will boost Robinhood Crypto.
Johann Kerbrat, vice president and general manager of Robinhood Crypto, said:
We are in our early days in the EU and we are excited to keep expanding there and beyond. The acquisition of Bitstamp will accelerate our global expansion.
This deal, expected to be completed in the first half of 2025, comes at a time when Robinhood’s crypto business is growing fast but also facing regulatory challenges in the U.S. Bitstamp’s established reputation and extensive licenses provide a strong foundation for us to build upon, said Robinhood.
US SEC comes for crypto exchanges
The SEC has argued that crypto tokens should be considered securities and subject to its registration rules. Crypto firms have accused the SEC of overreach. Gary Gensler, chairman of the U.S. SEC warned crypto exchanges that providing disclosures to investors doesn’t exempt them from regulatory enforcement.
Also Read: Singapore welcomes Bitstamp into its regulated crypto sphere
Bitstamp office in Canada. Source: Bitstamp
In a recent interview, Gensler emphasized that disclosures alone are inadequate if crypto exchanges engage in market manipulation or spread misleading information. He stated that many crypto companies fail to provide disclosures, operating in a manner unacceptable in traditional financial markets.
The SEC has increased its enforcement actions in the crypto industry, especially after the collapse of cryptocurrency exchange FTX and the Terraform Labs debacle in 2022. The SEC is also involved in litigation against some of the biggest names in the crypto industry, including a case against Coinbase, the largest exchange in the United States.
Cryptopolitan reporting by Jai Hamid