Despite facing pressure from the US Securities and Exchange Commission (SEC), no-fee crypto brokerage Robinhood Markets Inc. reported strong results in its third-quarter earnings report, with its crypto division a standout performer. After a promising quarter in a competitive market, the company said its total net deposits for the year have increased to $34 billion.
Robinhood and the Crypto Boom
According to the company’s financial report, the third quarter was the second-highest in Robinhood’s history, with year-over-year revenue growth of 36% to $637 million. The crypto division contributed significantly to the results, posting a 165% increase in revenue to $61 million in the quarter. This is not a surprising result, as Robinhood completed its acquisition of Bitstamp, which boosted the company’s overall trading volume.
Robinhood’s performance this year has been exceptional, especially after its previous struggles with FTX. Last year, the company acquired a stake in Alameda Research in a $605 million deal, leading many to believe that Robinhood would exit the crypto space. However, contrary to expectations, Robinhood’s crypto division has become one of the company’s key pillars.
In the third quarter, Robinhood’s assets under management (AUC) increased 76% year-over-year to $152.2 billion. The company said the increase was due to steady net deposits, along with rising stock and crypto values.
As a company that relies on Bitcoin, Robinhood Crypto has benefited greatly from market movements. With Bitcoin recently approaching its all-time high, the company’s trading volume is likely to increase further in Q4.
US SEC Regulatory Issues
Robinhood has faced regulatory challenges in the United States. In May, the Securities and Exchange Commission (SEC) sent the company a Wells notice, warning that some of Robinhood’s cryptocurrency offerings may violate federal securities laws and could be subject to legal action. However, the SEC has not filed any lawsuits to date and Robinhood continues to operate as normal.
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However, the company has made strategic adjustments to its product expansion. Robinhood has added more tokens and enabled the conversion of assets like Solana (SOL). While this is a positive move, access is limited to customers in the European Union.
