Coindesk: Robinhood has terminated its partnership with market maker Jump Trading.

Coindesk reported that the partnership between online brokerage Robinhood and market maker Jump Trading has been discontinued since July of last year, with cryptocurrency orders now being handled by companies such as B2C2. This move is speculated to be due to the uncertainty of the U.S. cryptocurrency regulatory framework, with several institutions acknowledging the challenge of complying with unclear regulations.

Robinhood and Jump Trading Have Ended Partnership for a Year

According to sources cited by the foreign media Coindesk, online brokerage platform Robinhood and financial market giant Jump Trading have ceased their partnership in the cryptocurrency field.

Prior to this, Robinhood was supported by Jump Trading in 2019 to enter the cryptocurrency market with a focus on offering free cryptocurrency trades, with Jump Trading handling Robinhood's daily trading volume of billions of dollars.

Sources also revealed that since the fourth quarter of 2022, Robinhood's financial reports have not mentioned Tai Mo Shan, an affiliate of Jump Trading that was previously responsible for handling its orders.

Coindesk also referenced SEC documents indicating that as an alternative, Robinhood is now collaborating with other market makers including B2C2, with B2C2 currently handling the majority of Robinhood's orders.

Speculation Points to Regulatory Issues

While the reason for the termination of the partnership between Jump Trading and Robinhood remains unclear, it seems to be related to the increased scrutiny and enforcement actions by the SEC in recent years.

Jump Trading, as one of the largest and most dominant market makers in the traditional financial sector, has been active in the cryptocurrency field since 2017.

However, according to a report by Bloomberg, top market makers including Jane Street and Jump Trading are gradually withdrawing from the U.S. cryptocurrency market due to the collapse of FTX and TerraUSD, as well as regulatory uncertainties in the United States.

Both parties have stated that the unclear regulatory framework has made it difficult for their companies to operate cryptocurrency-related businesses in a manner that meets their standards.

Robinhood Faces a Series of Setbacks

Previously, Robinhood was fined $30 million by the New York State Department of Financial Services NYDFS for violating anti-money laundering AML and cybersecurity regulations, and it laid off over 30% of its employees twice last year. In June of this year, it further reduced its workforce by 7% due to sluggish market activity. The second-quarter financial report also showed an 18% decline in revenue from cryptocurrency trading.

At the end of last year, Robinhood even received a subpoena from the U.S. Securities and Exchange Commission SEC requesting disclosure of information regarding its cryptocurrency listings, custody, and operations.

Therefore, if Jump Trading's exit from the partnership with Robinhood is due to concerns from financial authorities and high costs associated with its involvement in the cryptocurrency business, it seems understandable.