Author: Michelle Lazo

Robinhood (NASDAQ:HOOD) recently received a Wells Notice from the Securities and Exchange Commission, which was unexpected given the company’s conservative approach to cryptocurrency listings, according to a KBW research report released on Monday.

KBW highlighted that Robinhood offers a relatively modest selection of fifteen cryptocurrencies on its U.S. platform, in contrast to some competitors who list over two hundred digital assets. Analysts led by Kyle Voigt believe that Robinhood’s crypto operations in the U.S. will remain unchanged, and they anticipate the SEC will likely file a lawsuit in the coming months.

“Our preliminary assessment suggests that Robinhood would opt to contest the SEC in court and stands a better chance of prevailing than many of its U.S. peers, should they face similar challenges. This is due in part to Robinhood’s stringent listing criteria,” the KBW report stated.

Cryptocurrency trading accounts for 12% of Robinhood’s total revenue. KBW speculates that the SEC’s focus might be on a specific group of digital assets offered on the platform. From a revenue risk standpoint, the most critical scenario would be if the SEC decides to classify Ethereum as a security, since it represents approximately 25% of Robinhood’s crypto trading volume.

The brokerage maintains a market perform rating on Robinhood’s stock with a target price of $20. Following the news, Robinhood’s shares saw a slight increase, trading up by 1.3% early Tuesday, at around $18.

According to KBW, Robinhood shareholders may not receive a definitive resolution on the potential legal case until late 2025 at the earliest, drawing parallels to the ongoing regulatory proceedings against Coinbase (NASDAQ:COIN).

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MPCH, a provider of cryptographic storage solutions, has partnered with global specialty and property and casualty reinsurer Canopius to deliver enhanced insurance coverage for digital assets held in custody. This new collaboration seeks to bolster the security framework for digital assets by offering specialized custody insurance, further protecting against potential losses or damages to crypto assets that could render them irrecoverable.

MPCH utilizes advanced cryogenic cold storage solutions equipped with Sensitive Compartmented Information Facilities, custom Hardware Security Modules designed based on zero-trust and zero-knowledge principles, and Multi-Party Computation technology. Canopius brings its insurance expertise into the partnership, offering products that are tailored to address the unique risks associated with digital asset security.

Miles Parry, CEO of MPCH, commented on the partnership, stating, “Our collaboration with Canopius is a significant milestone in the evolution of security within the tokenized ecosystem. By combining our advanced cryptographic storage capabilities with Canopius’s robust insurance solutions, we are better equipped to protect sensitive digital assets and provide our clients with the confidence they need to operate in the digital world. Our aim is to deliver scalable, customized insurance solutions that effectively address the challenges of protecting private keys.”

This announcement follows Canopius’s recent initiative to enhance its cyber insurance offerings in collaboration with Group-IB, and the launch of a new insurance facility by Marsh in March, which provides up to $825 million in coverage for digital asset custodians globally, covering various custody solutions including both cold storage and other methods.

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Ethereum’s ongoing evolution takes a significant leap towards enhancing the accessibility of crypto wallets with the introduction of ‘EIP-3074’. This Ethereum Improvement Proposal is poised to streamline user experiences, marking a crucial stride in the quest for mainstream adoption.

The Ethereum community’s focus on improving wallet usability has intensified, with developers deliberating on key enhancements for the blockchain’s forthcoming hard fork, Pectra. Among the proposed changes, EIP-3074 stands out, aiming to elevate the functionality and ease of use for wallets on the Ethereum network.

Unlike previous iterations, which aimed to enhance externally owned accounts through concepts like account abstraction, EIP-3074 takes a significant leap forward by empowering smart contracts to authorize EOAs. This shift promises to revolutionize wallet user experience, potentially offering a tenfold improvement, according to Paradigm Chief Technology Officer Georgios Konstatonopolous.

The proposal introduces innovative features, including the ability for users to batch transactions, delegate transaction capabilities to smart contracts, and enable third-party sponsorship for transaction fees. Additionally, it allows users to sign transactions submitted by other parties, offering enhanced flexibility and security.

While EIP-3074 has garnered widespread support within the Ethereum community, it has also sparked concerns, particularly regarding security implications associated with batched transactions. Some members, including Safe co-founder Lukas Schor and Argent wallet co-founder Itamar Lesuisse, have expressed apprehension over potential security vulnerabilities and the risk of wallet exploitation.

Despite these reservations, Ethereum developers remain committed to advancing wallet usability while addressing security concerns raised by the community. As Ethereum continues its journey towards greater accessibility and usability, EIP-3074 represents a significant milestone in achieving these objectives.

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MetaMask, the leading Ethereum crypto wallet, is unveiling a new feature called Smart Transactions this week, aimed at mitigating the impact of maximal extractable value on users.

Smart Transactions, an optional feature, enables users to submit transactions to a “virtual mempool” before they are officially recorded on the blockchain. Developed by ConsenSys, the company behind MetaMask, this virtual mempool defends against certain MEV strategies by simulating transactions behind the scenes to secure lower fees for users.

MEV represents additional profit blockchain operators can extract by manipulating transactions before they are processed, similar to front-running in traditional financial markets. MEV significantly influences Ethereum’s functionality, inflating costs, slowing transaction speeds, and occasionally causing transactions to fail.

Jason Linehan, director of ConsenSys’ Special Mechanisms Group, highlighted the prevalence of wasted funds due to MEV-related issues, emphasizing the urgent need for solutions to enhance user experience.

MetaMask’s virtual mempool initiative mirrors private mempools, which enhance transaction privacy and guard against MEV. This marks the platform’s initial step in an ambitious roadmap, aimed at revolutionizing MetaMask’s transaction routing methods on Ethereum.

Linehan clarified that MetaMask’s virtual mempool is distinct from conventional private mempools and is essential for addressing Ethereum’s substantial hidden expenses.

Smart Transactions operate by leveraging Ethereum’s existing infrastructure, with MetaMask’s virtual mempool financially penalizing builders and searchers if they deviate from quoted transaction prices. Linehan noted that the majority of Ethereum’s current operators have already opted into MetaMask’s virtual mempool program.

In addition to securing better prices for users, Smart Transactions simplify transaction tracking within MetaMask, eliminating the need for users to navigate external block explorer websites.

Linehan described Smart Transactions as a foundational step towards MetaMask’s broader objectives, envisioning future developments such as intent-based architectures.

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Robinhood Markets Inc. (NASDAQ:HOOD) disclosed in a regulatory filing on Monday that it has received a formal warning from regulators regarding potential enforcement action related to its cryptocurrency operations.

The warning, known as a Wells notice from the US Securities and Exchange Commission, specifically pertains to Robinhood Crypto and various aspects of its cryptocurrency business, including listings, custody procedures, and platform operations.

According to the filing, the SEC’s staff informed Robinhood that they have made a “preliminary determination” to recommend that the SEC pursue enforcement action against the company.

Potential outcomes of this action could include an injunction, a cease-and-desist order, disgorgement of profits, and other penalties or restrictions on business activities.

Robinhood stated that it had previously received a subpoena related to the investigation and has cooperated with the SEC throughout the process.

It’s important to note that a Wells Notice provides the company with an opportunity to respond to the SEC’s allegations, and the issuance of such a notice does not necessarily guarantee that enforcement action will ultimately be taken.

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