Will Robinhood’s Bitstamp Acquisition Help With SEC Hurdles?
Last week, Robinhood decided to double down on its interest in the cryptocurrency sector. The trading platform announced its acquisition of the cryptocurrency exchange Bitstamp. This strategic deal, valued at around $200 million, is expected to be completed in the first half of 2025.
Following this, investment bank Architect Partners revealed that this is a major step for Robinhood. According to the firm, Robinhood will extend its global footprint and bolster its crypto-related business. This step comes despite facing regulatory scrutiny from the U.S. Securities and Exchange Commission [SEC].
Robinhood has been steadily shifting toward the cryptocurrency market. This transition is evident as cryptocurrency trading contributed to 20% of Robinhood’s total revenue in the first quarter of 2024. The acquisition of Bitstamp is a significant milestone in this strategic shift. It enables Robinhood to expand its reach and strengthen its position in the global cryptocurrency landscape.
Architect Partners also highlighted in their report that this acquisition immediately broadens Robinhood’s international reach. Through this, the firm will be allowed to operate in various jurisdictions beyond the United States. This is vital as the firm navigates regulatory challenges domestically. Just last month, the SEC issued a Wells Notice to the trading platform, indicating a potential enforcement action due to its listing of certain cryptocurrencies deemed unlicensed securities.
Also Read: Robinhood May List Ripple’s XRP After Exchange Acquisition
Why Bitstamp is Important
Following its debut in 2011, Bitstamp is considered one of the oldest cryptocurrency exchanges. It has an extensive operational history and global licensing, making the firm a valuable asset for Robinhood. By acquiring the exchange, Robinhood is expected to garner a well-established platform with a strong user base. It will also provide access to a range of regulatory approvals across an array of regions.
The coming months will be crucial as the firm finalizes and addresses the regulatory challenges. Additionally, Architect Partners noted that the $200 million acquisition price represents a notable discount from Bitstamp’s $500 million valuation during a 2018 majority investment. This discount reflects current market conditions and positions Robinhood to leverage Bitstamp’s infrastructure and market presence at a competitive price.
Also Read: Robinhood to Acquire Crypto Exchange Bitstamp for $200 Million