The Blog

Node Ahead 68: Crypto adoption is outpacing the internet and SEC goes after Robinhood

By Brett Munster

Welcome back to The Node Ahead, a cryptocurrency and digital asset resource for financial advisors. Every other week, we discuss the latest crypto news and the potential impacts it may have on you and your clients.

In this edition, we’ll be covering:

  • how crypto adoption is outpacing early internet adoption
  • the SEC’s latest swing at Robinhood

Crypto adoption is accelerating

The crypto industry is transitioning from early adopters to achieving mainstream acceptance. This shift is driven by technological advancements, growing institutional interest, and an expanding array of use cases demonstrating the versatility and potential of cryptoassets. From the approval of ETFs to MicroStrategy’s use of Bitcoin as a primary treasury asset to El Salvador’s adoption of Bitcoin as legal tender, and major financial firms such as PayPal and Fidelity offering cryptocurrency services, the momentum behind cryptoassets is undeniable. Regulatory environments are evolving to accommodate this new asset class, with an increasing number of countries developing frameworks to ensure investor protection while fostering innovation.

Given the rapid pace, it’s notable that crypto adoption today is outpacing internet adoption in the 1990s, underscoring the rapid acceptance and integration of digital assets into our lives. In 1990, the internet had nearly three times as many users as there were crypto holders in 2015. According to a study by, the number of people throughout the world who own cryptoassets surged to 580 million this year, more than double the number of internet users over a similar ten-year span. The total number of cryptoasset holders is on pace to hit 1 billion by the end of 2025, achieving this milestone in significantly less time than the internet did.

Data Source:,

One of the catalysts this year has been the ETFs. We have previously covered how fast ETFs have grown, but it’s worth revisiting. Last week, BlackRock’s ETF (IBIT) crossed the $20 billion AUM mark. To put into perspective how fast this product has grown, consider that the only other ETF to reach $20 billion AUM in less than 1,000 days was JPMorgan’s Equity Premium ETF (JEPI), which took over two and a half years. BlackRock’s Bitcoin ETF achieved this milestone in less than five months. At this pace, IBIT is on track to surpass the largest gold ETF by the end of this year.


It’s not just BlackRock’s ETF; many Bitcoin ETFs have been wildly successful. Last week, the price of Bitcoin surged to nearly $72,000 after US spot Bitcoin ETFs recorded their second-highest single day of net inflows at $886 million. This level of sustained demand is unusual for ETFs, which typically experience an initial surge at launch followed by tapering growth. The continued demand for Bitcoin ETFs is likely due to professional investors who initiated due diligence when the ETFs launched in January, now clearing compliance reviews and beginning to allocate. According to one study, the percentage of advisors expecting to recommend crypto investments to clients has surged by more than 70% since the Bitcoin ETFs were approved, indicating a growing interest in Bitcoin from the traditional financial world.

Ethereum usage is also accelerating. According to Bitwise Asset Management, the number of average daily Ethereum users has grown nearly 800% since the start of 2020.


Key metrics are growing rapidly across the entire crypto ecosystem, reflecting the excitement in the space. Transactions across various blockchains and developer activity are at all-time highs.



The rapid adoption of crypto networks, evidenced by their accelerated growth compared to early internet adoption, underscores the transformative potential of digital assets. The surge in institutional interest, regulatory advancements, and the success of the bitcoin ETFs are clear indicators of the mainstream acceptance of cryptoassets. As Ethereum usage accelerates and key metrics across the crypto ecosystem reach new heights, it is evident that the momentum behind decentralized finance is building. This ongoing evolution promises to pave the way for a more inclusive, innovative, and dynamic financial landscape, highlighting the profound impact that cryptoassets are poised to have on the global economy.

Robinhood receives a Wells Notice

With all that happened in May, we didn’t even get a chance to cover the SEC’s most recent enforcement action in our last newsletter. Not to worry, we are going to dive into the Wells Notice the SEC issued Robinhood now.

In past issues, we have covered Wells Notices issued by the SEC to Coinbase, Kraken, and Uniswap. In each of those cases, we highlighted the absurdity of the SEC’s claims. On May 4th, the SEC issued a Wells Notice to Robinhood claiming that they are operating an unlicensed securities exchange. While this is the same claim it made against other exchanges in the space, this might be the weakest one yet.

Robinhood has gone to extensive lengths to walk a regulatory tightrope and avoid breaking any rules. Three years ago, Robinhood began a lengthy and expensive process to register as a special-purpose broker dealer to support digital assets. At the time, the SEC had signaled that this was the necessary step toward being able to allow the trading of cryptoassets in a compliant manner. Robinhood proceeded to meet with the SEC 16 times over the course of the following year to obtain that license. According to Robinhood’s CEO and Chief Legal Counsel, the company tried in good faith to address any concerns the SEC had, promised to meet all standards the SEC wanted in place and attempted to work with the SEC to figure out a path to obtaining the necessary licensing. After more than a year, the SEC dismissed Robinhood saying the agency didn’t see a path towards obtaining the license even though the SEC refused to provide any reasoning as to why.

Now the SEC may sue Robinhood for not having the proper license, even though the SEC denied the license in the first place. If this story sounds familiar, it should. It is the exact same experience Coinbase and Kraken each independently said they had with the SEC. Gary Gensler has publicly claimed time and again that crypto companies need only to “come in and register.” And yet, every time a well-intentioned company tries to do exactly that, not only are they stonewalled by the SEC, which refuses to engage, but they end up being sued by the SEC years later.

Robinhood has also been more conservative in its crypto offerings than any previous Wells recipient. While Coinbase and Kraken offer more than 200 tokens on their exchange (none of which the SEC has proven are securities as of yet), Robinhood only offers 15 cryptoassets to be traded. Robinhood even went the extra mile to de-list all assets named in any SEC lawsuit as a sign of good faith. Therefore, none of the assets Robinhood makes available on its platform have ever been mentioned by the SEC as being securities. This means the SEC is considering charging Robinhood with facilitating the trading of unregistered securities but has yet to tell Robinhood which of those 15 assets they deem to be securities.

But it’s even worse than that. In order for an asset to be a security, by law, there must be an investment contract. Knowing the standard definition of investment contracts does not apply to cryptoassets for numerous reasons, the SEC has attempted to unilaterally broaden the definition of what an investment contract is. Not once, in any lawsuit against Coinbase, Kraken, Uniswap, and now Robinhood, has the SEC been able to identify an investment contract associated with any cryptoasset the SEC has deemed to be a security. Instead, the SEC has argued there are investment like “expectations” and “investment concepts.” Instead of identifying a common enterprise, also required by law to be considered a security, the SEC has argued there is an “ecosystem” in connection with these cryptoassets.

As Kraken’s Chief Legal Officer, Marco Santori, pointed out, Coinbase, Kraken, Uniswap, and Robinhood do not broker, trade, or settle “expectations.” None of the exchanges list a single “investment concept.” No exchange has ever passed an “ecosystem” from a seller to a buyer. The SEC’s attempt to broaden the long-standing definition of an investment contract could be seen as nonsensical.

Robinhood is a very sophisticated financial company with world-class lawyers. The vast majority of their business operates in the traditional financial world, which means they have successfully obtained all licenses and cleared all regulatory hurdles associated with trading stocks. That includes registering with the SEC. I think it’s awfully telling that even they weren’t able to navigate the SEC’s incoherent stance on crypto.

It also appears that the Robinhood executive team is not too worried about the SEC’s legal threat, given they are doubling down on their crypto business and acquiring long-running crypto exchange Bitstamp for $200 million. The deal will add upwards of five million new crypto customers for Robinhood but, more significantly, it will also let the popular trading app take over the 50+ licenses that Bitstamp has in Europe and around the world. In the past Robinhood has been ultra-conservative with regards to their crypto business specifically to stay out of the SEC’s crosshairs. But given the SEC’s numerous losses in court, Robinhood is now putting its foot on the gas as crypto is quickly becoming one of the pillars of the company’s growth. Even Wall Street isn’t too concerned with the SEC’s threat, as HOOD is up 25% since the Wells Notice was issued.

It’s abundantly clear at this point that rather than adhere to the mandate of the agency, Gensler has chosen to use his position to further a political agenda. The SEC is threatening lawsuits despite knowing these cases have weak legal standing simply to try and have a chilling effect on the adoption of crypto in the U.S. It doesn’t appear to be working as companies and Wall Street are increasingly becoming less concerned with the SEC’s empty threats. All Gensler is doing is wasting taxpayer dollars, hurting U.S. businesses and the economy, and harming U.S. consumers.

In Other News

President Biden vetoes resolution overturning SAB 121.

One-third of U.S. voters say they’ll weigh candidates’ crypto views before voting.

Semler Scientific, a small med-tech company with a market cap of just over $200m, saw its stock price soar when it announced it had used about $40m of its cash reserves to buy bitcoin, making it its primary treasury reserve asset. 

The FDIC says that higher interest rates have created 63 ‘problem banks’ and $517 billion in unrealized losses.

PayPal announced the expansion of its PYUSD stablecoin to Solana.

Mastercard announced it is piloting a crypto payment network in Argentina, Brazil, Chile, France, Guatemala, Mexico, Panama, Paraguay, Portugal, Spain, Switzerland, and Uruguay.

The SEC closes Salt Lake City office after a disastrous crypto lawsuit results in a $1.8 million penalty, citing “significant attrition.”

Disclaimer:  This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.