Robinhood had a profitable third quarter in its crypto section as it disclosed its revenue surged by 165% amid US SEC strain.
Despite regulatory pressure from the U.S. SEC, Robinhood Markets Inc., a commission-free crypto brokerage firm, has posted strong results in its third-quarter performance report, highlighting a robust crypto segment.
In a competitive market, the firm announced that its Year-to-Date (YTD) Net Deposits had risen to $34 billion.
Robinhood and the Crypto Boom
As revealed in its earnings report, Robinhood’s third quarter was its second-best on record for revenues, achieving a 36% year-over-year revenue growth, totaling $637 million, with its crypto division playing a key role.
The company reported a 165% increase in crypto revenue to $61 million over the quarter. This surge comes after Robinhood’s acquisition of Bitstamp, which has bolstered its transaction volume.
Robinhood’s performance this year is notable given its prior exposure to FTX. Last year, the company repurchased shares from Alameda Research for $605 million, leading many to speculate it might scale back its crypto involvement. Instead, the Robinhood Crypto unit has become one of its core strengths.
During Q3, Robinhood’s Assets Under Custody (AUC) saw a 76% year-over-year increase, reaching $152.2 billion.
The company attributed this growth to consistent net deposits, rising equity, and higher crypto valuations.
As a firm with substantial Bitcoin exposure, Robinhood Crypto has benefited significantly from recent market trends.
With Bitcoin nearing its all-time high, the brokerage may see even higher volumes in the fourth quarter.
The Challenge of U.S. SEC Regulation
Robinhood faced a regulatory scare earlier in the year when the U.S. Securities and Exchange Commission (SEC) issued a Wells Notice in May, suggesting some of its crypto services might violate federal securities laws and could result in a lawsuit.
However, no suit has been filed so far, and Robinhood has continued regular operations.
In response, the company has adopted a more strategic approach to its offerings. As previously reported, Robinhood has been adding new tokens and enabling transfers for assets like Solana (SOL), although access to these services is currently restricted to customers in the European Union.
