So you have some crypto stored in your Robinhood account, and just learned about all the cool finance products that BlockFi has to offer. Perhaps you’ve recently learned about some of Robinhood’s limitations when it comes to Bitcoin in 2021. Whatever the reason be, I will be showing you the process of moving from Robinhood to BlockFi.
Let’s get busy.
So there’s some good news, and some bad news about holding Bitcoin and cryptos in Robinhood in 2021.
Before we get to the good stuff, we’re going to need to rip the band-aid off and serve you some harsh truths.
Though you may be able to purchase holds of different cryptocurrencies on Robinhood, when you do so, you are unable to move it. In fact, you don't even get to hold onto it yourself.
Robinhood stores all crypto in their own wallet systems.
As per their website, Robinhood does not actually allow withdrawals or transfers of cryptocurrencies off of their service at this time (though they "plan do to so in the future" according to the site).
Their current service only allows you to buy and sell Bitcoin.
In order to transfer, you must actually sell your crypto position, and re-buy your assets in a separate location.
Currently, through the way Robinhood has set up their cryptocurrency trading functions, you have to cash out your crypto to move the money. This likely creates an unavoidable taxable event, assuming you have any gains.
When you buy cryptocurrency with US dollars, and then it appreciates in value, when you ‘cash out’ back into USD, you have earned capital gains.
Unlike a Roth IRA, this new money is taxable by the IRS, and it is legally necessary to pay them their dues.
For any capital gains made from crypto withdrawals over $10 USD, Robinhood will send you the necessary tax documents for that years’ gains.
Regardless of the dollar amount gained, you will have to report these capital gains to the IRS.
Again, you aren't able to truly withdraw your cryptocurrency at this time - you must sell off your position and re-buy it elsewhere (like BlockFi). But if you still want to do this, here you go.
Here is a step-by-step guide to liquidating your Bitcoin and crypto portfolio from Robinhood:
BlockFi features interest earning accounts, loans backed by cryptocurrency, as well as the ability to trade different cryptos, and even a Bitcoin rewards credit card!
How does BlockFi offer their interest rates for investing accounts?
BlockFi lends to both institutional buyers and its regular users through its crypto-backed loans.
While they offer competitive interest rates, they lend money with higher interest rates than offered in their investment products. By doing this, they are able to generate revenue.
BlockFi features accounts for both individuals and businesses - we'll cover signing up for a personal account here.
As with engaging in any financial products, the devil's in the details.
Here's some fine print to keep track of, in the interest of CYA!
In this new frontier of digital currency, things are seemingly always in flux.
BlockFi is spearheading the world of crypto financial products in 2021, and has a lot of attractive features for the digital moguls of the new age.
Even though the way we play the game of money is changing, the rules are still the same as they have been since the dawn of modernity.
When diving into new ventures, it never hurts to make sure you're keeping yourself safe.
Part of this looks like staying diversified, taking advantage of compound interest, budgeting properly, and locking portions of your assets away for emergency use.
Another part is making sure you're staying on top of your financial literacy - you can quickly lose "Monopoly" by not understanding how the rules work.