- The SEC’s lawsuit against major exchanges has sparked turmoil in the crypto industry.
- Regulatory pressure is forcing exchanges like Robinhood to make strategic changes.
- The effects of Robinhood’s decision to delist certain tokens continue.
The aftershocks from the SEC’s lawsuit against Binance and Coinbase continue to send tremors throughout the crypto industry. Crypto assets and exchanges alike face an existential threat in the US, compelling them to navigate stringent but ambiguous regulatory frameworks. Among those affected is Robinhood, which finds itself forced to take drastic measures to save itself.
After complying with the SEC’s recent crypto crackdown, Robinhood is now pressured to make strategic adjustments and find ways to safeguard its position in the industry.
Regulatory Pressure Ruffles Robinhood’s Feathers
Following its decision to delist Solana (SOL), Cardano (ADA), and Polygon (MATIC), Robinhood finds itself grappling with the challenges posed by reduced revenue and dwindling user activity. To navigate these challenges, the commission-free exchange is eyeing a restructuring of its company, leading to workforce cuts.
Approximately 150 employees, or 7% of the staff, will leave the company, marking the third round of layoffs in just over a year. Robinhood’s Chief Financial officer Jason Warnick cited “adjusting volumes” and “better alignment of team structures” as the reason for the cuts.
Previously, Robinhood cut its staff by 9% in April and 23% in August 2022, amounting to over 1,000 employees following its trading activity decline.
The online brokerage’s lay-off plan could also be attributed to the rising pressure from the regulator’s crypto crackdown. Robinhood has been at odds with the SEC since the FTX debacle, receiving several subpoenas over their crypto listings. Regulators are forcing the exchange to necessitate compliance and cost-saving measures.
This includes the exchange’s decision to sell its Cardano (ADA), Polygon (MATIC), and Solana (SOL) holdings worth a cumulative $70 million in the following months.
On the Flipside
- It has been less than a year since Robinhood listed Cardano (ADA) on its exchange.
- The SEC case against Binance.US led to the exchange grounding 10% of its workforce amid rising regulatory pressure from the SEC.
- Robinhood incurred a 44% loss in monthly active years and a 30% decline in revenue, according to its Q1 2023 report.
Why This Matters
Robinhood’s lay-off news can alarm other exchanges and retail investors into thinking the market is collapsing. It could lead other exchanges to follow suit and cast a shadow of doubt over the market and crypto space. However, it’s worth noting that Robinhood’s impact is considered minimal in the US, given the scale of Binance and Coinbase.
Read more about Cardano:
Cardano DeFi TVL Resurges, New ATH, Volume Spike, and More
Read more about Robinhood:
Robinhood Claims SEC Dismissed Their Attempts to Register as Crypto Broker
