Crypto Trading Volume Plummets on Robinhood as Equities Remain Strong

The well-known trading platform Robinhood (HOOD) had a large decline in the number of bitcoin trades it handled in May, according to the company’s report, which was made public on Monday. Surprisingly, the trading volume for cryptocurrencies saw a considerable fall while it remained high for stocks and options.

The research claims that in May, the trade volume for cryptocurrencies fell precipitously to $2.1 billion, a 43% reduction from April. Additionally, the volume of cryptocurrency traded fell shockingly by 68% year over year. The company’s daily average trading revenue (DART) metric, which counts the number of trades that generate commissions or other fees on average each day, also showed a fall. The DART for cryptocurrency trading fell by 22% in May, and it fell significantly by 53% when compared to the previous year.

Delisting of Tokens and SEC Lawsuits

As part of its weekly review process, Robinhood decided to delist three tokens last week, leaving only 15 cryptocurrencies available for trading on the site. The delisted tokens, ADA by Cardano, MATIC by Polygon, and SOL by Solana, were deemed securities in recent actions brought against Coinbase (COIN) and Binance by the U.S. Securities and Exchange Commission (SEC).

Regulatory Challenges and Investigations

Dan Gallagher, the top compliance attorney of Robinhood, disclosed that the company made an attempt to become a special-purpose broker for digital assets in 2021. Unfortunately, the expected result was not obtained from these interactions. As stated in its 10-K filing in February, Robinhood has only ever received an investigation subpoena from the SEC relating its cryptocurrency operations, as opposed to Coinbase and Binance, who were the subject of litigation for alleged violations of U.S. securities laws.

In conclusion, while equities and options trading remained active, Robinhood’s cryptocurrency trading activity saw a significant drop in May. The company’s choice to delist specific currencies and its ongoing legal issues, such as the SEC subpoena, demonstrate how the legal environment is changing and how important compliance is for the cryptocurrency business.