Robinhood has sounded the alarm to investors about potential risks to its business model related to increased regulatory scrutiny of cryptocurrencies and payment for order flow (PFOF), a payment arrangement with market makers which allows trading platforms to offer low-commission or commission-free trading.
According to Robinhood, payment for order flow and transaction rebates from cryptocurrency trading accounted for 79% of the company's total revenue in the second quarter, with PFOF making up 38% and cryptocurrencies making up 41%.
"Regulation of the cryptocurrency industry continues to evolve and is subject to change. Moreover, securities and commodities laws and regulations and other bodies of laws can apply to certain cryptocurrency businesses," the platform said in an amended S-1 filing on Friday.
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