Do You Own Crypto on Robinhood? Everything You Need to Know

If you're one of the millions of users who have invested in cryptocurrency on Robinhood, you're likely curious about what's happening with your digital assets. As of now, Robinhood has paused buying and selling of certain cryptocurrencies.

Robinhood users can still hold onto their existing cryptocurrency investments. The platform allows users to view their crypto holdings in their portfolio, but they can't buy or sell until further notice.

Robinhood's decision to pause buying and selling has left many users wondering about the future of their crypto investments. The exact timeline for resuming crypto transactions is still unclear.

If you've sold cryptocurrency on Robinhood, you'll be taxed on any profit made. This is because cryptocurrency is treated as a form of digital property and is taxed just as many other capital assets would be.

You'll pay either long-term or short-term capital gains taxes, depending on whether you owned the crypto for more than a year or not. If you convert one cryptocurrency into another, you'll be considered to have sold the original coins, which means you'll be subject to short-term or long-term capital gains crypto taxes based on your length of ownership.

You can claim a capital loss if you sell cryptocurrency at a loss, and deduct the amount lost from any profits that would ordinarily be considered taxable.

Here's a breakdown of the tax documents you can expect from Robinhood:

These tax documents will typically be ready to view by the middle of February, so you have plenty of time to provide the information to your tax professional or enter it into tax software like TurboTax.

Taxes on cryptocurrency can be a bit tricky, but essentially it's treated as digital property and taxed like other capital assets. You'll pay either long-term or short-term capital gains taxes if you sell cryptocurrency at a profit.

The key factor in determining which tax rate you'll pay is how long you owned the crypto. If you held it for more than a year, you'll be taxed at the reduced long-term rate. If you sold it within a year, you'll be taxed at the higher short-term rate.

Converting one cryptocurrency to another is considered a sale, so you'll be subject to either short-term or long-term capital gains taxes based on your length of ownership. If you sell cryptocurrency at a loss, you can claim a capital loss and deduct the amount lost from any profits that would be taxable.

Filing taxes on assets can be a bit overwhelming, but don't worry, I'm here to break it down for you.

You'll typically receive tax documents from Robinhood, including a 1099 form, which will help you report your earnings from your investments. This form will be ready to view by the middle of February, so you have plenty of time to provide the information to your tax professional or enter it into any tax software you're using.

To report investment income, you'll need to use Form 1040, and the specific place where you report your income depends on the type of investment income you've earned. For example, gains or losses from the sales of stocks or bonds will be reported on Line 7 on Form 1040.

If you received, sold, or disposed of cryptocurrency, you'll need to check Yes to a question asking about cryptocurrency activities on your 1040 form. You can use Form 8949 to determine your gains and losses and report them on Schedule D of Form 1040.

Here's a brief rundown of the tax forms you might need to use:

Remember, working with an accountant or other tax professional can be helpful if you're unsure of what forms to use or if you have a complicated situation where you sold many investments over the course of the year.

Buying crypto on Robinhood is a straightforward process that can be completed in just a few minutes.

You'll need to open a Robinhood account, which requires being at least 18 years old, having a valid Social Security Number, and being a legal resident of the United States, including the District of Columbia, Puerto Rico, or the US Virgin Islands.

To fund your account, you'll need to provide and confirm your bank account number, and you'll need at least $1 in your account to make trades, including cryptocurrency.

You can choose from 19 different cryptocurrencies offered by Robinhood, including bitcoin, ethereum, and dogecoin, with the option to buy fractional amounts of most coins.

The minimum purchase requirement for Dogecoin is one coin, but you can buy any amount of a dollar or more of other coins.

To place an order, simply choose the amount you want to buy, specify whether you want to make a one-time trade or a recurring one, and click the "Submit Buy" button to complete the transaction.

Here are some key features to keep in mind when buying crypto on Robinhood:

Robinhood holds the majority of investors' coins in cold storage, which is entirely disconnected from the internet, making it a safe place to store your crypto assets.

Robinhood carries crime insurance that protects a portion of the assets held across their storage systems, underwritten by Lloyd's syndicates, the world's leading insurance marketplace.

However, it's worth noting that some coins are held in hot storage, and the insurance only covers a portion of the assets.

To add an extra layer of security, Robinhood recommends setting a secure password that contains at least 10 characters, ideally a random combination of upper and lowercase letters, numbers, and symbols.

Turning on two-factor authentication, also known as 2FA, is also a good idea, as it adds an extra step of verification when logging in to your account.

Reviewing devices that have accessed your account and setting up a PIN or password for changes to your SIM card can also help protect your account.

Consider transferring your coins from Robinhood to a cold wallet of your own for maximum security.

Here are some key security measures to keep in mind:

If you own crypto on Robinhood, it's essential to know what coins are supported. You can transfer the following coins to your Robinhood account: Aave, Avalanche, Bitcoin, Bitcoin Cash, Bonk, Cardano, Chainlink, Compound, Dogecoin, Dogwifhat, Ethereum, Ethereum Classic, Litecoin, Pepecoin, Shiba Inu, Solana, Stellar Lumens, Tezos, Uniswap, USDC, and XRP.

These coins are listed in the Robinhood supported coins list. Make sure to only transfer these coins, as unsupported coins may be lost and transactions are irreversible.

You can find the full list of supported coins below:

When transferring coins, make sure to confirm that the address and network match, and that the platform receiving the funds supports the network they are sent on.

Robinhood Crypto is a commission-free trading platform that allows users to buy and sell cryptocurrencies.

Robinhood started as a stock and ETF trading platform, but they launched commission-free trading of Bitcoin and Ethereum in 2018.

You can use the same user-friendly interface as Robinhood to add cryptocurrencies to your portfolio.

Robinhood Crypto currently offers trading in Bitcoin, Ethereum, Dogecoin, Litecoin, Shiba Inu, and 14 other cryptocurrencies.

But, be aware that state law may prohibit trading some coins, so you should always check to be sure of the rules.

For example, trading of USD coin is prohibited in New York and Texas.

Robinhood Crypto holds users' cryptocurrency in cold storage, meaning it's not connected to the internet, which adds an extra layer of security.