According to the article, the platform's receipt of a Wells Notice from the SEC is unexpected considering the business's cautious stance towards digital asset listings.

Robinhood is taken aback by the SEC's Wells Notice, according to KBW.

The broker anticipates no changes to the platform's current asset listings or U.S. crypto activities.

According to the research, Robinhood has a better chance of winning an SEC prosecution than the majority of its American rivals.

Given the company's extremely cautious approach to digital asset listings, the Securities and Exchange Commission's (SEC) Wells Notice for Robinhood (HOOD) is unexpected, according to a research study released by KBW on Monday.

KBW points out that while some of its competitors provide more than fifteen cryptocurrencies on their American platform, Robinhood only offers fifteen two hundred digital assets.

“We expect no change to HOOD’s current U.S. crypto operations or asset listings - and expect the SEC to bring forward a suit within the coming months,” analysts led by Kyle Voigt wrote

“Our preliminary view is that HOOD would likely fight the SEC in court and has a higher likelihood to prevail than most U.S. competitors (if put in similar situations) given HOOD’s stricter listings standards,” the authors wrote.

Crypto trading makes up 12% of Robinhood’s revenue, the report said, and KBW assumes that the SEC will likely go after a subset of digital assets on the platform.

“The worst case scenario from a revenue-at-risk perspective is if the SEC chooses to move forward with categorizing ether (ETH) as a security - as this likely makes up ~25% of HOOD’s crypto assets/trading,” the report added

The broker has a market perform on the stock with a $20 price target. The shares were trading 1.3% higher in early trading on Tuesday at around $18.

KBW said that Robinhood shareholders won’t have full clarity on the outcome of a potential legal case until late 2025 at the earliest, citing the regulator’s ongoing case against crypto exchange Coinbase (COIN).