Amid a troubling backdrop for the cryptocurrency complex, Robinhood (NASDAQ:HOOD) announced that it would end support for the popular Solana (SOL-USD) coin, along with Cardano (ADA-USD) and Polygon (MATIC-USD). Following the announcement, data from CoinMarketCap shows that the SOL crypto slipped more than 1% on Friday. In the trailing week, it’s down almost 13%.
According to Robinhood’s official statement, the platform regularly reviews the cryptos it offers on its trading service. Based on its latest assessment, management arrived at the decision to end support for Solana and its aforementioned peers on June 27 at 6:59 p.m. Eastern. The statement emphasized that no other coins are affected and that users’ virtual currencies are still safe on Robinhood.
As for the practical impact of the decision, Robinhood users can continue to buy, sell and hold ADA, MATIC and the SOL crypto until the deadline. Further, users have the option to transfer Solana and the other digital assets until June 27.
However, as Robinhood discloses, certain states have varying rules. Per the statement, “[i]f you live in Hawaii or Nevada, you can’t buy ADA, MATIC, and SOL. If you live in New York, you can’t transfer ADA, MATIC, and SOL.”
Finally, any of the three cryptos still held in user accounts will be sold for market value. Later, the proceeds will be credited to users’ Robinhood buying power.
A Brewing Debate Surges for Solana and the Crypto Complex
Chatter on various internet and social media platforms declared that holding cryptos such as Solana in hot storage or otherwise custodial platforms defeats the purpose. To be clear, Robinhood claims that nearly all cryptos held in its platform lies in cold storage vaults. Nevertheless, the only “true” way of securing digital assets is for individuals to manage their own security apparatuses.
However, such a protocol raises a massive debate about Solana and the intrinsic value of the broader blockchain ecosystem. Some prominent voices in finance and economics claim — to much heated debate — that the intrinsic value of cryptos is zero.
Eswar Prasad, Tolani Senior Professor of Trade Policy and professor of economics at Cornell University, stated in an op-ed for The New York Times that at the time of writing (June 2021), the market capitalization of all cryptos “now exceeds $1.5 trillion, a staggering amount for virtual objects that are nothing more than computer code.”
In fairness, proponents of Solana and the crypto complex can counter with a host of technical innovations — mainly a trustless digital payment paradigm — that the underlying sector delivered. However, the bottom line is that if public and private institutions remove convenient accessibility to the SOL crypto and its ilk, the entire market could suffer.
Why It Matters
Increasingly, government agencies have taken a dim view of crypto-related initiatives. Recently, the U.S. Securities and Exchange Commission (SEC) took on Binance, the world’s biggest crypto exchange, suing the platform and its founder Changpeng Zhao on 13 different charges. Soon after, the regulatory agency sued Coinbase (NASDAQ:COIN), leading to broader pessimism in the blockchain industry.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
