Robinhood, the popular commission-free investing app, has become one of the top places for everyday investors to buy and sell cryptocurrencies like Bitcoin, Ethereum, and Dogecoin. With crypto going mainstream in recent years, many new investors are using Robinhood as their entry point into the world of digital assets.
However, some users have expressed concerns over privacy when buying and selling crypto on Robinhood. Specifically, people wonder if Robinhood tracks their crypto activity and reporting it to third parties. Here’s what you need to know about Robinhood and crypto tracking.
Does Robinhood report crypto trades to the IRS?
Yes, Robinhood reports your crypto trades to the IRS just like other investment brokers. Any time you sell cryptocurrency on Robinhood and realize a capital gain or loss, those transactions get reported to the IRS. This is no different than how stock trades would be reported to the tax authorities.
Robinhood sends users a 1099-B form each year detailing their sales proceeds, cost basis, and capital gains/losses for all investment transactions, including crypto. You need to report these capital gains and losses on your annual tax return. Robinhood also reports your total yearly trading volume to the IRS.
This level of reporting is standard practice across the crypto industry. All reputable exchanges like Coinbase, Gemini, and Kraken also report your crypto transactions to the IRS in the same way Robinhood does. So Robinhood is not doing anything unusual in this regard.
What crypto details does Robinhood report to the IRS?
According to its support site, here’s what Robinhood reports to the IRS for your crypto trades each year:
- Date of transactions
- Your proceeds from sales
- Cost basis for the crypto sold
- Your realized capital gains or losses
- Your total trading volume across all investments
With this information, the IRS can verify you are properly paying taxes on your crypto gains. If the proceeds you report on your tax return don’t match up with what Robinhood has on file, it could trigger an audit.
Does Robinhood share your private crypto wallet addresses?
No, Robinhood does not report any details about your personal crypto wallets or public wallet addresses to the IRS or any other third parties. The only information Robinhood shares with the tax authorities pertains to the transactions executed within your Robinhood account itself.
Your public crypto addresses are considered private information that is unaffected by tax reporting rules. Robinhood has no knowledge of and does not track any external crypto wallets or transactions associated with your account. Your privacy is maintained in that regard.
Does Robinhood sell your data?
Robinhood does not sell, share, or monetize your personal identifiable information for advertising or marketing purposes. In their privacy policy, Robinhood states:
We do not sell or share your personal information to third parties for their marketing purposes without your consent.
So you can be assured Robinhood is not selling your private data, including crypto transaction history, to external brokers, marketers, or other third parties.
Robinhood may share your anonymized and aggregated data for research or analysis purposes. However, this data is stripped of personal identifiers and used to study broader investing trends and behavior. Your privacy remains intact.
Who does Robinhood share your data with?
While Robinhood does not sell your data, they do share it selectively for business purposes as outlined below:
- Service providers – Robinhood partners with vendors for fraud prevention, customer support, and other services. They may provide access to your data as needed to deliver those services.
- Law enforcement – Robinhood will release your data when required by law or court order.
- Research and analysis – Aggregated, anonymized data may be shared with partners for general market research.
- Regulators – Robinhood provides your data to financial regulators upon request as part of routine oversight and audits.
- Credit bureaus – Information is shared with credit reporting agencies related to creditworthiness.
So in summary, Robinhood only shares your information in a limited capacity to deliver services and comply with legal obligations. Your data is not monetized or sold to marketers.
Can you trade crypto anonymously on Robinhood?
No, it’s not possible to trade cryptocurrency anonymously on Robinhood. To open an account, you need to provide personal identifying information including:
- Full legal name
- Physical address
- Date of birth
- Social Security Number
Robinhood also requires a photo ID for identity verification. This upfront KYC (Know Your Customer) process means all crypto trading activity is linked back to your real identity. Your name, SSN, and other PII get tied to your trading records and reported to tax authorities as described above.
There is no way to bypass KYC and convert to pseudonymous trading on Robinhood. Everything you do is tracked back to your legal identity. Other crypto platforms like Bisq do support truly anonymous trading using bitcoin without any personal data attached. But Robinhood does not operate in this non-KYC manner.
Can you use a VPN to be anonymous on Robinhood?
Using a VPN or “virtual private network” does not make you anonymous on Robinhood, despite hiding your true IP address. Because you still have to provide legal identification documents, Robinhood knows your real identity regardless of the IP your traffic comes from. VPNs only shield your IP, not your personally identifiable information.
Some traders use VPNs with Robinhood to access geo-blocked content or get around trade restrictions. But this merely masks your physical location. All your private details, crypto transaction history, and trading activity remains visible to Robinhood and regulators.
Does Robinhood collect personal data from your device?
Yes, Robinhood does collect some personal data from your device as spelled out in their privacy policy. This includes:
- Device identifiers like IP address
- Operating system and app version
- General location information
- Biometric data (if using Touch ID)
- Cookies and tracking technologies
This data helps Robinhood deliver and improve their services. Importantly, any personally identifiable details are anonymized and aggregated before being shared externally for research purposes. So your privacy remains protected.
Can you use Robinhood crypto anonymously on a friend’s device?
No, you cannot use Robinhood crypto anonymously by trading through a friend or family member’s device and account. Robinhood requires identity verification tied to your SSN before trading. Any activity would thus be linked to your friend’s identity, not yours.
Attempting to circumvent KYC requirements by trading crypto on someone else’s Robinhood account would be considered fraudulent misuse of their platform. You could get the account locked down for suspicious activity if caught doing this.
Does Robinhood share crypto data with partners?
Robinhood selectively shares certain types of crypto data with partners to deliver services but keeps user privacy and most data in-house.
For example, Robinhood partners with market data providers to source real-time crypto price data. They also work with crypto custody and wallet partners like Coinbase to help store user assets safely.
However, Robinhood does not share any personally identifiable customer data, trading history, holdings, or other sensitive information with partners by default. Most user data stays private within Robinhood systems. Data sharing follows strict protocols as outlined in their privacy policy.
Who are Robinhood’s major crypto partners?
Here are some of Robinhood’s major partners in the crypto sector:
| Partner | Relationship |
| Chainalysis | Blockchain analysis for risk monitoring |
| Coinbase | Crypto wallet & custodial services |
| FactSet | Market data provider |
| Tagomi | Liquidity and trade execution |
| Axoni | Blockchain-based post-trade infrastructure |
| Gem | Cryptocurrency data APIs |
| Bison Trails | Blockchain infrastructure |
These partnerships allow Robinhood to source liquidity, market data, infrastructure, risk management, and other crypto-related services. But strict data sharing practices remain in place to protect user privacy.
Conclusion
In summary, Robinhood does report your crypto trades to tax authorities and collects some device data as outlined above. However, they do not sell your private information to any third parties or marketing firms. Robinhood also keeps the majority of user data in-house and only shares details externally when critical to deliver services.
While not fully anonymous, Robinhood offers much greater privacy than traditional stock brokerages. User data is handled ethically and not monetized. Appropriate privacy controls are in place around partners. So crypto investors can feel secure trusting Robinhood.
With mainstream adoption, brokers like Robinhood give average people simple access to buy and sell Bitcoin, Ethereum, Dogecoin and more. And they achieve this while prioritizing customer privacy as much as any regulated platform can.
So if you want an easy crypto investing experience with minimal invasion of privacy, Robinhood crypto provides a responsible balance. You retain most of your anonymity while still operating within the lawful financial system.
Cryptocurrencies themselves are generally pseudonymous until converted into real-world fiat currency through an exchange like Robinhood. So to maximize privacy, crypto users should take care to limit transfers in/out of brokers to the extent possible.
Trading within your Robinhood account leaves minimal public trace. But cashing out to your bank opens up links between your identity and crypto holdings. Being mindful of this on- and off-ramp issue will help preserve your financial privacy when using Robinhood or any other mainstream crypto platform.
Robinhood offers compliant, regulated access to crypto markets while protecting what matters most – your personal data. The company has proven it can be trusted to do the right thing when handling sensitive user information.
