When setting up an account on a cryptocurrency exchange, you are usually asked to complete the Know Your Customer (KYC) process. KYC is a requirement that you will come across with almost every centralized cryptocurrency exchange.
Cryptocurrency exchanges require users’ SSNs in order to comply with government regulations. The two which are usually involved are the Bank Secrecy Act (BSA) and the Anti Money Laundering (AML) regulations. Cryptocurrency exchanges are monitored because they are known to aid criminal activity.
You can purchase cryptocurrency without KYC, but doing so is harder and riskier than using an exchange that follows KYC regulations. The most common ways of buying cryptocurrency without proving one’s identity are through decentralized exchanges and bitcoin ATMs. Many users choose to first purchase cryptocurrency using cash at centralized exchanges.
For now, you will need to go through a crypto exchange platform to trade your dollar for bitcoin or another digital currency. Once you fund an account, you will still need to exchange dollars for Bitcoin. The exchange you are using might offer a wallet option so that you can easily move your coins from the exchange account into a safer wallet.
Or, an exchange might place limits on how much cash you are allowed to deposit. Without exchanges, you have to find another person who is willing to exchange cryptocurrency and negotiate an exchange price. You can probably set up an exchange account without going through a KYC process, but there are limits on your account pending identity verification.
Different Exchanges Require Different Information
Depending on which exchange you choose, you might have to submit information such as your social security number, identity card, and your source of income when creating an account. Every cryptocurrency trading platform will require your Social Security number when you register, and you can expect to have it requested for each new account that you open. Providing a social security number guarantees that your taxes are paid, so the IRS requires exchange platforms to collect basic user information and report this later.
You cannot get around giving the crypto exchanges your Social Security number, as this is federal law, so you will want to keep your SSN handy as you head over to create an account. If you are a US citizen, then any crypto platform on a federal level is going to require your social security number. Every cryptocurrency platform operating in the United States will ask for your SSN, as long as you are a U.S. citizen or resident. SSNs are only given to U.S. citizens or residents, so it helps identify you on a platform and allows a platform to verify that you are an American citizen.
First, a cryptocurrency exchange needs to verify you are a U.S. citizen or resident. You and the platform should complete the tax information correctly, to avoid getting into any problems. IRS law requires users to file tax documents, so you cannot skirt taxes on Robinhood. It is important to recognize at this point that Robinhood does not request your tax ID and will not take one.
Some Case Studies
Every time you earn money on Robinhood, whether through selling stocks, ETFs, cryptocurrency, or some other means, it is recorded and linked to your Social Security number, then sent to the IRS so that the IRS knows how much money you are earning and taxes you accordingly. Coinbase uses your Social Security number for a few reasons, like checking on your background information, for tax reporting purposes, as well as complying with U.S. anti-money laundering laws.
The Coinbase platform is simple to set up, however, there are a few pieces of information that you need to supply, such as your legal name, your home address, date of birth, the last four digits of your Social Security number, and how you plan on using your Social Security number. When registering for Coinbase in the United States, the exchange will ask you for personal information.
Before you can begin cryptocurrency trading, you need to confirm who you are. This is standard ID verification required by the main exchanges for everyone looking to trade cryptocurrency. Also, most exchanges do not ask for the complete SSN, only asking for an identifier from the user. None of the decentralized exchanges require an SSN or any other verification to trade cryptocurrency.
On Cryptocurrency Exchange Wallets
Many cryptocurrency exchanges run their wallets, so users can begin trading cryptocurrency once an account is opened, with no need to worry about getting their hands on a digital wallet. Users can either deposit money to the exchanges to purchase cryptocurrency, or they can deposit their cryptos to exchange them for other currencies, known as crypto-to-crypto trading.
Cryptocurrency exchanges are platforms where users can exchange digital currencies for other assets, including cryptos such as bitcoin, Ethereum, litecoin, and conventional currencies such as dollars and euros. There are hundreds of crypto exchanges that you can use to buy cryptocurrency online, but some of the most popular ones are Coinbase, Gemini, and Kraken.
Your bank or money transfer provider can give you details on what bank details you need to supply when you make your transfer. If someone wants to transfer money to you from a foreign bank account, you will have to ensure that they have all of the appropriate details needed to carry out the transaction. Depending on if you are receiving the money from the overseas bank account, or collecting the transfer in cash, you will need different pieces of information.
For instance, ABA routing numbers are used to identify banks in the US, and you will have to supply this, or the SWIFT, to send the money to that country, whereas if you are sending the money to Europe, you will need the IBAN and the SWIFT from the receiving bank. IBANs are not used in the U.S., but banks and transfer providers in certain countries will need to provide IBANs before the transfer can be processed. Both US Bank and Wells Fargo accept an ITIN as an alternative for an SSN ID, but that is for secured cards only.