Robinhood IPO Plan Delays as SEC Reviewing Its Crypto Business

The IPO could be pushed till next fall.

The ambitious initial public offering (IPO) plan of Robinhood Markets is being delayed further as the American financial markets regulator is deeply reviewing the platform’s cryptocurrency business.

Citing anonymous sources, Bloomberg reported on Friday that the Securities and Exchange Commission (SEC) is taking more than usual interest in the broker’s submitted prospectus and is asking about the broker’s growing cryptocurrency business.

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Established as a zero-fee broker, Robinhood disrupted the world’s trading industry. The startup forced many long-running firms to drop their legacy business models and jump into commission-free trading.

Booming Crypto Business

Additionally, Robinhood was one of the early adopters of cryptocurrencies and started offering buying and selling of digital currencies to its customers. Earlier this year, the company revealed that its demand for crypto offerings boomed in the first quarter of 2021 as more than 9.5 million customers traded crypto, jumping from only 1.7 million in the previous quarter.

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Robinhood’s trading infrastructure could not cope with the skyrocketing crypto trading demand, and the platform crashed several times during the cryptocurrency rally over the past few months.

But, Robinhood is not the only fintech startup recording this crypto growth. Recently, UK-based Revolut published its 2020 financials showing £39 million in fair value gains from crypto assets. However, the startup turned an operational loss of £200.6 million in the year.

While Robinhood has been preparing to list its shares on the US stock exchange next month, the SEC’s ongoing review process has surely delayed its timeline. One of the sources said that though there is some chance that the Robinhood IPO could be launched this summer, it is likely to be postponed until next fall.

Meanwhile, the SEC is streamlining the distribution plan to the traders who faced losses by Robinhood’s controversial Payments for Order Flow model. The broker already paid the $65 million penalties imposed on it. 

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