Robinhood IPO Filing Reveals $88 Billion in Cryptocurrency Trading, Dogecoin 34% of Crypto Revenue – News Bitcoin News

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Bitcoin News 02 July, 2021 - 08:31am 19 views

When does Robinhood IPO go public?

Robinhood, the stock-trading app that became a household name and media mainstay in 2020, is going public in 2021 after years of speculation. nerdwallet.comThe Robinhood IPO: What to Know

Crypto is a comparatively new business for Robinhood but one that has grown substantially in popularity, filings reveal. The trading platform, which bills itself as democratizing investing, stated that 17% of its revenues in the first three months of 2021 ended March 31, were derived from cryptocurrency transactions, up from 4% in the fourth quarter of 2020.

The rally in doge, driven by social-media mentions and an avid base of users, has propelled it to the No. 6 largest crypto in the world, according to CoinMarketCap.com.

But the meme asset was created as a lighthearted alternative to bitcoin back in 2013 and its staying power as bona fide crypto isn’t assured. To be sure, no crypto’s existence over a long period is assured.

Bitcoin boasts a market value of $629 billion, Ether’s total value is $247 billion, while dogecoin is tiny by comparison at $32 billion.

Hugh Tallents, a senior partner at boutique business consulting firm cg42 said that it should be concerning to investors that Robinhood is deeply entrenched in a meme asset.

“With dogecoin and some of the other outlandish [memes], it is just a videogame that will end up with a lof of people that will get financially hurt and Robinhood will be at the crosshairs of enabling that,” Tallents told MarketWatch.

The revelation of Robinhood’s dependence on dogecoin and crypto also raises another curiosity in crypto circles that has become a bit of parlor game.

Back in February, digital-asset enthusiasts became briefly obsessed with speculation linking Robinhood to a dogecoin wallet address that was valued at around $2.1 billion.

The Wall Street Journal in February reported that it had identified records that showed that a person, or entity, owned about 28% of all of dogecoin in circulation—a stake worth about $2.1 billion at the time.

That stake is presently worth more than $10.5 billion at dogecoin’s current value of around 25 cents per coin, according to CoinDesk data, translating to roughly 42 billion doge, assuming the address didn’t accumulate or sell any coins since February.

 Vlad Tenev, CEO of Robinhood Market in the past has said that “any coins that [the company holds] are for the purposes of sort of providing access in holdings for our customers. We don’t have significant positions in any of the coins that we keep on a proprietary basis or anything like that.”

Robinhood’s IPO paperwork indicates that its business would be adversely affected, and growth in “our net revenue earned from cryptocurrency transactions may slow or decline, if the market for Dogecoin deteriorate or if the price of Dogecoin declines,” including as a result of factors such as negative perceptions of Dogecoin or the increased availability of Dogecoin on other cryptocurrency trading platforms.

Dogecoin’s year-to-date gains are stellar but it is down 66% from its early May peak at 74.07 cents.

A request for comment from Robinhood wasn’t immediately returned.

But Robinhood’s filing suggests that the online brokerage has hitched its wagon closer to the growth of crypto and in particular a meme segment of the inherently volatile asset.

The company has set aside some 35% of its issuance to individual investors, if they invest via the Robinhood app.

The last time capital-gains taxes were hiked, in 2013, the wealthiest households sold 1% of their equity assets, a Goldman analyst found.

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

Read full article at Bitcoin News

Robinhood’s Finra Settlement Highlights Growing Pains of Fintech Firms

The Wall Street Journal 02 July, 2021 - 01:03pm

Robinhood agreed to pay nearly $70 million to resolve allegations the brokerage misled customers, approved ineligible traders for risky strategies and didn’t supervise technology that failed and locked millions out of trading, according to the agreement with the Financial Industry Regulatory Authority that became public Wednesday. The settlement is the largest ever levied by Finra.

“These are common issues with fintech companies,” Alma Angotti, a partner at consulting firm Guidehouse who previously worked in the enforcement department at Finra, said. “It is hard to make that shift from technology companies building really cool things to a regulated financial institution.”

She said sometimes the basic tackling of compliance gets lost in the process when companies focus on innovation. “You really need to be cognizant of the compliance requirements that exist in the old world that you’re disrupting, because that will apply to you as well,” she said.

Robinhood, which on Thursday filed paperwork with the Securities and Exchange Commission to go public, is also facing a number of federal and state investigations, including its handling of user account takeovers, its compliance with anti-money-laundering rules and its practices around approving users to trade options, among other things, according to the prospectus.

The company also disclosed in the prospectus that it has reached a settlement in principle with New York’s top financial regulator to resolve allegations that its cryptocurrency trading unit failed to maintain and certify a compliant anti-money-laundering program. The settlement would include a monetary penalty of at least $10 million and would require the company to retain a monitor, according to the filing.

The company has 31 million customers, 18 million of whom had funded accounts as of the end of March, according to the settlement document. The number of customers with funded accounts grew by 143% between the end of 2019 and 2020 and continued to grow this year, according to its prospectus.

Our Morning Risk Report features insights and news on governance, risk and compliance.

“Robinhood has invested heavily in improving platform stability, enhancing our educational resources and building out our customer support and legal and compliance teams,” Jacqueline Ortiz Ramsay, a spokeswoman for the company, said in a statement. “We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”

As part of the agreement, Finra asked the fast-growing online brokerage, launched in 2014, to retain an independent consultant to conduct a comprehensive review of its policies, systems, procedures and training to ensure the company’s retail communications comply with the requirements of federal securities laws. The agreement asks the outside consultant to file an initial written report within six months and gives Robinhood another three months to adopt and implement the recommendations from the review.

Robinhood previously retained independent consultants as part of its settlements with the SEC and Finra, a self-regulatory organization of the brokerage industry.

Robinhood also is facing dozens of civil lawsuits from individual investors in relation to trading restrictions imposed by the online brokerage that temporarily limited purchases of certain securities amid a stock-trading frenzy involving so-called meme stocks earlier this year.

The company said an increased focus on new or additional regulations that could impact its business, signaled from recent statements by lawmakers, regulators and other public officials, is a risk factor, according to the prospectus.

Robinhood beefed up its legal and compliance teams over the past year and a half. The online brokerage hired two chief compliance officers and two deputy general counsels in August. These included Norm Ashkenas from Fidelity Institutional & Fidelity Brokerage Technology as the CCO of Robinhood Financial, the company’s securities trading unit; Kelly Zigaitis from Wells Fargo Advisors as the CCO of Robinhood Securities, its affiliated clearing broker; and Lucas Moskowitz, who previously worked at the SEC, as the company’s vice president and deputy general counsel. The team also hired a financial crimes leader this year.

Robinhood’s legal team has grown to about 60 people, from 20 to 30 in 2019, according to a company representative. Its compliance team has seen similar growth, according to the company. Robinhood’s compliance functions are now embedded with the brokerage units and supervise new products and technology, a company representative said before the public offering was announced.

Building good compliance and legal functions to keep up with the business is a priority, the company representative said, adding that the Finra settlement demonstrates the results of such measures as the company continues to build up its legal and compliance team.

J. Ashley Ebersole, a partner at law firm Bryan Cave Leighton Paisner LLP who advises fintech companies, said compliance issues are often an effect of the exponential growth a business like Robinhood has experienced. “It comes at a cost,” he said. “But I don’t doubt that they can bear the costs and get it right.”

Write to Mengqi Sun at mengqi.sun@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Most global professionals increasingly consider external contributors to be members of their workforce, yet far fewer are preparing to manage these workers, according to a new report from MIT Sloan Management Review and Deloitte. The report provides actions organizations can take to move toward a workforce ecosystem approach and rethink traditional workforce management practices.

As organizations come back to the physical workplace, many companies plan to implement a hybrid setup that combines in-person and remote working. The transition to new workplace configurations also creates an opportunity for leaders to rethink measures of productivity, innovate new business models, and refresh the employee and customer experience.

Many controllership leaders are rethinking numerous aspects of how they operate to contribute to the strategic mission of their organizations. Leaders at Biogen, Eaton, and IBM, share the ways their finance and accounting functions are adapting and transforming to meet evolving business needs. Digital is key. 

The Wall Street Journal news department was not involved in the creation of this content.

Most global professionals increasingly consider external contributors to be members of their workforce, yet far fewer are preparing to manage these workers, according to a new report from MIT Sloan Management Review and Deloitte. The report provides actions organizations can take to move toward a workforce ecosystem approach and rethink traditional workforce management practices.

As organizations come back to the physical workplace, many companies plan to implement a hybrid setup that combines in-person and remote working. The transition to new workplace configurations also creates an opportunity for leaders to rethink measures of productivity, innovate new business models, and refresh the employee and customer experience.

Many controllership leaders are rethinking numerous aspects of how they operate to contribute to the strategic mission of their organizations. Leaders at Biogen, Eaton, and IBM, share the ways their finance and accounting functions are adapting and transforming to meet evolving business needs. Digital is key. 

The Wall Street Journal news department was not involved in the creation of this content.

Copyright © 2021 Dow Jones & Company, Inc. All Rights Reserved

Robinhood says it cannot assure investors a meme mania won't hit it again

CNBC 02 July, 2021 - 01:03pm

Robinhood said Thursday that the first time Robinhood restricted trading on its app — during the GameStop event earlier this year — may not to be the last.

In January, when an epic short squeeze erupted in GameStop's stock partially driven by retail traders, Robinhood shut down trading of certain meme shares due to increased capital requirements from its clearinghouses. Despite raising north of $3.4 billion in a few days to shore up its balance sheet, the brokerage limited trading of GameStop, AMC Entertainment and other Reddit darlings.

"We cannot assure that similar events will not occur in the future," Robinhood said in its S1 filing to the Securities and Exchange Commission.

As a brokerage, Robinhood has financial requirements to the clearinghouses that execute its clients trades, and some of these requirements fluctuate based on volatility in the markets. The volatility in January forced hikes in requirements and caused a flurry of outraged customers, many who threatened to leave the app.

"This resulted in negative media attention, customer dissatisfaction, litigation and regulatory and U.S. Congressional inquiries and investigations, capital raising by us in order to lift the trading restrictions while remaining in compliance with our net capital and deposit requirements and reputational harm," Robinhood said in the filing.

Robinhood CEO Vlad Tenev blamed the two-day trade settlement, known as T+2, for some of the clearinghouse deposit issues during the GameStop mania and called for real-time settlement.

"The existing two-day period to settle trades exposes investors and the industry to unnecessary risk and is ripe for change," Tenev said in a testimony to the House Financial Services Committee following the GameStop drama.

"The clearinghouse deposit requirements are designed to mitigate risk, but last week's wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks," he said.

The trading mania revived last month as Reddit traders continued to pile into their favorite meme stocks including GameStop, AMC Entertainment and others. AMC is up 2,400% this year.

Robinhood is expected to go public on the Nasdaq under ticker "HOOD" this year. The free-trading pioneer experienced record growth in the past year resulting in 18 million accounts and $80 billion in customer assets.

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