HOOD, COIN & SCHW Set to Benefit on Improving Laws for Crypto Firms

In January, the Donald Trump administration began its second term, boosting optimism amid crypto trading firms such as Robinhood Markets, Inc. HOOD, Coinbase Global, Inc. COIN, The Charles Schwab Corporation SCHW and Opensea. This optimism stemmed from reduced litigation and improved laws for cryptocurrency firms.

The Trump administration has been adding to the ongoing optimism, with the U.S. Securities and Exchange Commission ("SEC") scaling back lawsuits against crypto firms, reducing the aggressive approach taken earlier.

Recently Closed Lawsuits in the Crypto Space

On Monday, Robinhood announced that the SEC closed its probe of the company’s crypto business with no penalties. HOOD received a “Wells notice” in May 2024, which is issued when the SEC is planning to bring an enforcement action against a company, over crypto tokens traded on its platform.

Moreover, the SEC concluded its litigation probes into Opensea, the world’s largest marketplace for non-fungible tokens (NFTs), without categorizing NFTs as securities. Opensea received its “Wells notice” in August 2024.

On Friday, Coinbase revealed that the SEC in principle has agreed to drop its lawsuit against the firm, putting an end to a prolonged battle that was once considered a major threat to both the platform and the wider cryptocurrency industry. The SEC sued COIN in 2023 alleging that the company violated its regulations by allowing trading in at least 13 crypto tokens that it claimed should have been registered as securities.

Other Developments for Crypto Firms

Last month, Hester Peirce, commissioner of the SEC, was appointed as the new head of a crypto task force established after the new Trump administration took office. Her appointment was seen favorably in the crypto space.  The task force focuses on clarifying the regulatory framework around crypto assets.

In December 2024, Paul Atkins, a cryptocurrency advocate was nominated by Donald Trump to become SEC chair, whom crypto industry executives perceive as a friendly pick.

These changes pave the way for crypto firms to expand their presence in the digital asset space. In November 2024, Bloomberg reported that SCHW plans to offer spot cryptocurrency trading once U.S. regulations make doing it easier.

However, the crypto industry still anticipates enforcement actions to persist concerning frauds, but with a change in approach by the regulator. Thus, these changes don’t imply full freedom for crypto companies, as the aim is likely to pivot from broad regulatory crackdowns to targeted enforcement against fraud and consumer protection violations.

Now, the crypto industry is waiting for regulatory clarity on crypto's legal categorization and the respective agency that will regulate digital assets. While dismissals of cases or investigations may be rapid now, ensuring regulatory clarity might take time.