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Written by Drew Cochran on March 14, 2021
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How To Transfer Crypto From Robinhood To BlockFi 2021

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.

Transferring from Robinhood 

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. 

1. You don't have custody of your crypto

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.

2. You can't transfer your crypto

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. 

3. You might pay taxes in the process

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.

How to Liquidate Robinhood and move to BlockFi

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:

  1. Open your crypto investment in Robinhood
  2. Sell the shares by clicking the ‘trade’ button, selling for the full amount
  3. Repeat for each Cryptocurrency you hold in Robinhood
  4. Allow your pending Market Orders to execute (Sell during “Trading Hours” - on a regular week day from 9:30am-4:00pm EST for the quickest results)
  5.  When your crypto funds show up in your buying power, go to your account tab on the right
  6. Open the Menu in the top right corner, clicking on ‘Transfer’
  7. Transfer to your bank (or linked account of choice), transferring your full crypto investment
  8. Allow a few business days for your withdrawal to process
  9. If and when you receive a consolidated form 1099 from Robinhood, pay any capital gains taxes necessary to the IRS

Getting Started with BlockFi

BlockFi is a cryptoasset service provider and is backed by major investors such as Valar Ventures, Morgan Creek Capital Management, and Fidelity.

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.

blockfi calculator

How to Sign up for BlockFi

  1. Open an account here
  2. Provide your basic credentials, including name and e-mail address
  3. Verify your information through the processes they provide
  4. Choose between an 'Individual' or 'Business' account
  5. Enter your physical address, phone number, and verify (BlockFi is not decentralized, so they do require your physical address)
  6. Enter your SSN, and verify again
  7. Once your account is active, link any bank accounts and crypto wallets desired
  8. "Optional", but highly recommended: go into your account and 'Security' tab, and set up 2 factor identification for your security
  9. Sign up for the interest account, loan, or trading account of your choice!

Things You Should Know Going In

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!

  • BlockFi uses Gemini, which does not provide keys of crypto coins until withdrawn. (You are trading off some of your ownership here to gain access to the functions of the financial products you are using - namely the interest accumulation. To gain more security, implement personal 2-factor identification like Yubikey to protect your assets.)
  • Withdrawals take 1-2 business days to process, and may require further verification.
  • You get 1 free crypto and 1 stablecoin withdrawal per month - further withdrawals are subject to fees.
  • BlockFi has withdrawal minimums.
  • Trading between different cryptos incurs fees.
  • There was a security breach of BlockFi in March 2020 where some users information was compromised (again, 2-factor identification is great for personal online security)

Some Last Thoughts

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.

 

Article written by Drew Cochran

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