Robinhood does not give its Dogecoin holder access to any wallet or private key. They don’t allow users to transfer Doge from Robinhood to personal or other wallets. For a long time, Robinhood promised that it would give access to the private crypto wallet, but so far, they have not.
The only way you can take your crypto out of Robinhood is by selling Dogecoin for US dollars, transferring your USD to your bank account, and using that money to buy Dogecoin on another platform such as Binance or Kraken. There’s no way around it. However, it has a problem.
If you sell your Dogecoin for USD, you have to pay IRS capital gain tax during tax season. IRS treats cryptocurrency and stock gain in the same category. Therefore, if you already have bought Doge on Robinhood, it would be best if you don’t sell it now. Instead, hold on to it as long as you can and sell it for profit. In the meantime, if you want to buy more Dogecoin, use other crypto exchanges such as Bittrex, Crypto.com, Binance, or Kraken.
During the January 2021 GameStop saga, Rohinhood gathered a lot of negative press. However, Robinhood is not as bad as we hear in the news.
During the GameStop buying limitation by Robinhood, other companies such as Webull, TDAmeritrade, Charles Schwab, and Interactive Brokers also put a buying limitation on GME stock. But Robinhood got more negative press because most of the retail investors use this free software.
If your primary goal is to purchase Dogecoin as an investment and sell it later for a profit, Robinhood is an excellent choice. There’s no issue with that. However, if you want to use Doge as a digital currency to purchase something online, don’t use Robinhood.
In the real world scenario, however, Dogecoin has a minimal use case. Only a handful of businesses accept Doge, and the whole process of paying with this coin is complex. Online payment with USD is far easier and faster than paying with cryptocurrency. Therefore, if you are holding your Dogecoin on Robinhood, don’t worry. You are not missing anything.
If you buy Doge in hopes that its price would go up, then why spend it? Why not hold on to it?
However, we believe everyone needs to know the following things.
Robinhood Crypto claims that you can buy and sell cryptocurrencies commission-free. But, if Robinhood Crypto is not charging you a commission, then how are they generating revenue? They are not a charity organization. If something is free, then you are the product.
Robinhood has two individual companies. These are:
- Robinhood Financial, LLC.
- Robinhood Crypto, LLC.
Robinhood trades all its stocks and options through Robinhood Financial LLC. This company is a member of FINRA/SIPC, and all of your investment is insured, up to $500,000. Therefore, if Robinhood for any reason goes bankrupt, you would get back up to $500,000 from that insurance.
However, when you trade Dogecoin on Robinhood, these trades are executed under Robinhood Crypto, LLC. Robinhood keeps all of your cryptos in this company. Robinhood Crypto is not a FINRA/SIPC member, and your crypto investment is not insured. Therefore, if Robinhood suffers major hack or major server failures and fails to restore its servers properly, you may lose all of your Crypto investment.
So, how Robinhood makes money from crypto trading?
Robinhood Crypto front runs your trades. They don’t give you the best market price.
For example, you want to buy 1 Bitcoin at Robinhood. If you place a limit buy order at $60,000, Robinhood will not give you the best market offer. Robinhood will charge you $60,000 for 1 Bitcoin, but in reality, Robinhood bought the Bitcoin from the open market at $59,800 and sold it to you at $60,000.
In case of a limit sell order, if you place an order to sell your 1 Bitcoin at $60,000, Robinhood would not execute your order until the price goes beyond a specific price, for example, $60,200. Then, Robinhood would buy your 1 Bitcoin at $60,000. Then they would sell it in the market for $60,200. They would take this extra profit instead of giving it to you. In reality, Robinhood is doing business with your money.
In conclusion, if you have already bought Doge on Robinhood, there’s no way for you to transfer those coins out of Robinhood right now.