BEST CRYPTO EXCHANGES
Robinhood is a discount brokerage firm that operates online. The company came into being in 2013, and is among the pioneers of commission-free trading service.
It found instant success and it was only a matter of time before the other companies also jumped into the bandwagon and joined this business.
Essentially, Robinhood is a financial services company that offers a commission-free investing process.
It provides a mobile and web based investment platform that makes way for its users to invest in options, stocks, American depositary receipts, and exchange-traded funds.
With its easy-to-use mobile app, you can buy and sell stocks and cryptocurrencies all while traveling.
Since Robinhood is a regulated and centralized service, it is true that they will need your Social Security Number for the completion of your registration process.
Many people might get nervous while giving up their personal information online and might think why does Robinhood need my SSN?
Of course, it is pretty plausible that you may have qualms when typing your social security number on an app or website, especially when you are just getting started with it and have no idea about it whatsoever.
It is important to understand why they need to collect your personal data.
There are some common questions that might be in your head if you have just started using Robinhood:
Why Does Robinhood Need My SSN?
Why is it necessary to collect my personal data before I can start investing?
What are the advantages of getting your verification out of the way before starting your investment journey through Robinhood?
If you are someone who has all these questions in their mind then you better read ahead to get your queries answered.
Why Does Robinhood Need My SSN?
Robinhood does indeed ask for your SSN and there are three reasons why it does so.
It is important to acknowledge at this point that Robinhood does not require your Taxpayer identification number and it will not be accepted on this platform.
It goes without saying that identity theft is rampant in today’s age and your social security number must be guarded heavily.
It is meant to be kept private and you should not give it anywhere openly.
However, the IRS government law requires the user to report their tax documents so you cannot find your way around taxes on Robinhood.
Providing the social security number ensures that your taxes are being paid, which is why the IRS asks the trading platforms to gather the essential information about the user and report it later on.
Every time you make money on Robinhood by selling stocks, ETF, cryptocurrencies, or by other means, it is recorded and linked with your social security number and then sent to the IRS so they would know how much money you are making and tax you accordingly.
Don’t worry, you won’t be taxed until you close a trade. This is why entering the social security number is mandatory on every brokerage platform.
So, if you want to trade or invest in a trading platform, you’d have to provide your SSN first.
Why Does Robinhood Need My SSN?
There are multiple reasons why Robinhood asks its users to provide their social security numbers.
Security and Exchange Commission (SEC) Laws
You cannot invest in stocks, perform any anonymous investments or do trading of any kind without a complete KYC verification process.
Your identity needs to be thoroughly checked in order for you to be able to make any kind of investments through any platform.
Like other trading platforms, Robinhood is also quite serious when it comes to its security. Your social security number helps them identify you so they can make sure that you are who you say you are.
This way, no one can claim to be you and you cannot claim to be someone else either.
This is a form of identity fraud and asking for a social security number is a great way to identify someone.
In order to be able to make use of financial services of Robinhood, you need to be a permanent American resident, citizen or visa holder.
Eliminate Money Laundering
The reason why Robinhood asks for your SSN is not only related to eliminating tax evasion, but it also does so to set up a system that leaves no room for money laundering.
It’s no secret that money laundering is considered a major crime all around the world.
In addition, it is one of those serious issues that is being targeted by the US government and eliminating it has been one of the government’s top priorities.
When trading online, the government needs to know who actually is making all the transactions back and forth.
This is where your social security number comes in handy. With this number, the government knows that it’s you and the transactions are legal.
In order to have a seamless investment experience, it is extremely important to keep all forms of income safe from this highly illegal activity.
Even the slightest hint of any foul business in this regard can put your entire investment in jeopardy and you can end up in jail.
In order to protect its users from all such issues, Robinhood requests for your SSN at the time of registration. The application might suspend your purchasing activity if it detects any foul activity happening.
This is another step that helps in ensuring that you are protected against all such criminal activities.
So next time you ask yourself why does Robinhood need my SSN? You can go through this article!
Determine Potential For Investment
Robinhood needs to determine whether a broker that is registering on its website has the kind of background that is suitable for further investments.
It is done to judge financial suitability. If you are a defaulter in any form then you may not be allowed to register at all.
In order to decide about this suitability, Robinhood needs to gather as much personal data from you as possible.
Moreover the information that you put into the application regarding yourself, will help Robinhood in giving you suitable suggestions for investment.
This will enable you to invest in only those opportunities that do not exceed your risk appetite.
So far it is very clear that Robinhood takes this step for your protection and not to control you in any manner.
What Are The Benefits Of Giving Your Social Security Number To Robinhood?
- There are simple reasons why this practice is actually beneficial to brokers themselves. Once you provide your SSN to Robinhood, you will be able to do many activities:
- Unlimited trading options will be open to you. More trading options mean greater chances of earning huge profits.
- You can move on to open an instant or gold account in order to get more perks out of your stock investments. The Gold account comes with even more advanced features and offers a smoother trading experience.
- It will enable you to make withdrawals directly from your Robinhood account to your bank account. This will also save you from a lot of hassle.
This tells you that once you provide your SSN, Robinhood will strive to make things a lot easier and more profitable for you.
The app is there to provide efficiency to a broker and it is therefore important for the user to play their part.
All in all, providing the social security number is beneficial for traders as well.
How Safe Is It To Give Your SSN To Robinhood?
It is completely safe to provide your SSN to Robinhood because all your information and data are encrypted right after you put it into the platform.
Of course, you don’t expect a company of this caliber to leak your information. Robinhood also understands this and ensures the safety of your information.
It is a major part of the reason why Robinhood is among the most widely-used trading platforms across the world.
There is a form of security called the Transport Layer Security Protocol, which ensures that the data which you put in stays safe every single time.
Robinhood needs to make sure that it is in complete compliance with all government rules and regulations in order to give a safe and secure experience to its clients.
Imagine if you were to skimp on giving authentic and proper information, it will only hamper your performance on the app.
You will put your security in jeopardy along with compromising on any high returns that you could make through this application.
Not to mention, you won’t be able to access Robinhood Gold either.
Since Robinhood is not leaving any stone unturned in order to offer you complete protection, you should cooperate completely too in order to make it an effective and productive experience.
Feeling reluctant is natural and typing the social security number also sounds tedious, but rest assured knowing that it’s next to safe.
Stay on top of the latest technology trends — delivered directly to your inbox, free!
Subscription Form Posts
Written by Jason Wise
YOU MAY ALSO LIKE
Secure your digital life with NordVPN
- Privacy on any Wi-Fi
- Malware protection
- One account, six devices
- 5,500+ servers in 59 countries
