Robinhood and Coinbase Stock Jump. Crypto regulation fears may fade.

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Robinhood revealed that the SEC subpoenaed its crypto firm in December. Dennizn/Dreamstime

Regulators have focused on crypto companies since the collapse of FTX last November, weighing on stocks of industry players like Robinhood Markets and Coinbase Global.

Even with regulators looking closely at these companies, the stock market could well outpace fears of a crackdown for now.

Robinhood (ticker: HOOD), which views crypto as an important part of its retail-focused trading platform, revealed in filings on Monday that it had received a subpoena from the Securities and Exchange Commission. The SEC subpoena related to, among other things, Robinhood’s cryptocurrency listings, its digital asset custody and platform operations, the company revealed.

The December subpoena came “shortly after FTX filed for bankruptcy on November 11, 2022 and following the bankruptcies of several other major cryptocurrency trading and lending platforms earlier in 2022,” said Robinhood, naming hedge fund Three Arrows Capital and lenders Voyager Digital and Celsius Network.

The stock market, for its part, seems to shrug its shoulders. Robinhood stock jumped 3.5% on Tuesday, while shares of rival Coinbase, an all-crypto brokerage, jumped 11%. The S&P 500, by comparison, rose just 0.3% in Tuesday trading.

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The outperformance is particularly interesting to see in Coinbase, which is crypto-native and entirely dedicated to the digital asset space. While Robinhood doubled down on crypto during the last bull market – and even through much of 2022, introducing new services amid cascading prices – digital assets are not an integral part of the broker’s business, which remains dominated by options.

Coinbase, too, is increasingly reliant on diversifying into businesses like stablecoins and interest-bearing “staking” services, which the SEC has specifically targeted at competitors like Paxos and Kraken. Coinbase itself has disclosed the SEC’s scrutiny over the past year, and fears of a broader industry crackdown have grown since FTX’s collapse.

Still, with Robinhood and Coinbase’s gains accelerating on Tuesday, investors may not only be looking past regulatory scrutiny, but encouraging stocks.

Write to Jack Denton at [email protected]

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