Robinhood, the popular trading platform, has seen a significant increase in crypto trading volumes in the first quarter, with a surge of 224% reaching $36 billion. This growth has played a major role in driving the company’s transaction-based revenue up 59% year-over-year to $329 million. The revenue from crypto alone has witnessed a substantial rise of 232% to $126 million, according to Robinhood’s recent report.
The surge in crypto trading volumes on Robinhood’s platform is not surprising, as other publicly traded crypto peers like Coinbase have also reported impressive performances in the first quarter due to the improving conditions in the crypto market.
In addition to the increase in trading volumes, Robinhood has announced that it held $26.2 billion in users’ crypto assets under custody as of March 31, marking a notable 78% increase from the end of 2023. These figures demonstrate the growing interest and participation in cryptocurrencies among Robinhood’s user base.
The positive performance in crypto trading has significantly contributed to Robinhood’s overall financial success in the first quarter. The company has exceeded expectations, reporting $618 million in revenue, surpassing analyst estimates of $552.7 million. Additionally, Robinhood’s earnings for the quarter stood at $0.18 per share, exceeding the average analyst expectation of $0.06.
After the impressive financial results were released, shares of Robinhood saw a post-market trading increase of approximately 7%, while Coinbase shares experienced a slight decline. Year-to-date, Robinhood’s stock has risen by about 40%, while Coinbase has gained 22%.
However, amidst the positive news, Robinhood has recently disclosed that it has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) regarding its crypto unit. A Wells Notice informs the recipient that the regulator has concluded an investigation against them and plans to file an enforcement action.
Despite receiving the notice, Robinhood’s CFO, Jason Warnick, emphasized that it would not impact customer accounts or affect the operations of the crypto arm. He mentioned that the company has been conservative in its approach and has applied the same legal and compliance standards to its crypto operations as it does to its brokerage.
The SEC’s decision to issue a Wells Notice to Robinhood Crypto has been criticized by the crypto trade association Digital Chamber, calling it an “alarming development.” The association believes it is another example of the regulator’s “unchecked regulatory overreach.”
Overall, Robinhood’s impressive performance in the crypto market has contributed to its financial success in the first quarter. However, the Wells Notice from the SEC poses a potential challenge for the company in the future.
