Topic: Newbie here...NEED HELP> Robinhood cold wallet and I'm a NY resident :( (Read 128 times)

Yes, you should get a 1099-B which you would put in your schedule D.

Each situation is going to be different which is why I always start and end things like this when I discuss it here with 'talk to a tax advisor'. The rules are the same for everyone, but how it applies to you and your situation are probably going to be different then mine. The IRS classifies cryptocurrency as property so I don't know how that changes things for anything else you are doing.

Also shameless referral link for gemini if you decide to open an account with them: https://www.gemini.com/share/sqa3a9

-Dave

OP adding some additional info & feedback...

Lots of good advice here so far, so thx to all. FWIW I have about ~40.65 ETH @ avg cost of $1970 (About $80k initial invest)

Correct me if I'm wrong, but if i sell my ETH now, I'll get a 1099 from RH showing a $~32k loss. Not versed on current crypto tax law but in stocks there is the "wash sale" rule so not sure if that applies here...my guess is it might. So buying back ETH within 30 days, even if on Gemini, it could be an issue.

One thought is that maybe I open an account at Gemini so it's at least ready to go in case I do decide to cash out of RH.

Side thought, but not knowing the amounts involved, your financial situation, the amount of stress you feel waiting for things to happen.....

If you have the $, open an account at an exchange that will allow full transactions for NY people.
DYOR as to which to use, but I will say if you don't mind the full KYC thing that you already went though Gemini is NY based and they do actually have decent support.

But, if you have the funds move the funds to the new exchange while waiting for the cash withdraw from RH. It can take a couple of days for the funds to get to you and then another day or so for a new exchange to credit the funds to your account. All the while the market can be bouncing up and down.

This way you don't have to worry about the price of the coins as much. Since you stated you are already down, and with this next statement contact a tax advisor, you might be able to write some of the loss off on your taxes if you buy new coins before you sell the old ones. On that same note when you sell them your gain will be higher leading to more taxes. But, saying it again, contact a tax advisor.

-Dave

This does seem to be a stupid decision to me. People can purchase and would not transfer their funds. If they don't allow funds to be moved, they should also prohibit purchases. However, as you mentioned in the post, you could move to another area that allows transfers and solve the problem. Don't think you're losing money just because the price of Ethereum has dropped. Because you can buy eth at the same price on another exchange. It's just that you'll end up paying a small withdrawal fee. Don't just leave your money in the exchange the next time.

You can try going out on a "vacation" somewhere outside New York (but within the US of course) and then change your documents to match the location you're in (if it's even possible to get another drivers license from a different state), then go back to NY.

But, if you buy ETH, right after you sell it, it remains unrealized. So you can just sell it at the current price, even if that's lower than $1,900, and buy it a few minutes after approximately at the same price.

Consider using a decentralized exchange, then, from now on. Check Bisq: https://bisq.network/

Tend to agree with DaveF. No point going around regulations there, it'll just get you in hot water down the road -- and they will do their best to get you there, trust me. Confiscation is no fun.

Take the hit. Liquidate and close your account. When you get your cash, go get Gemini (and check with support first when you verify you can then take the ETH out into your own wallet). Buy your coin (may I suggest BTC instead, if you're really concerned about long-term value, that's way better than anything else), take it out.

You'll lose maybe 5% in total, but it's worth many good nights' sleep.

You don't need to leave New York to any other city to get solution, given that even though you do so, your account is still registered as a New York resident. So for me, my advice will be to sell your Ethereum on Robinhood app,  then head on to buying same amount using either Coinbase or Gemini which has the transfer option, to enable you transfer your coin to a safe Cold wallet for maximum security.

Note: You don't have to worry about the current price value, in as much as you only intend to sell, buy back and hold on for a long term.

AFAIK since you signed up for RobinHood as a NY resident and gave them all your info they know you are a NY resident (hello NY neighbor Dave I'm one too) at this point there is no way to move your funds out to a cold wallet unless you change your address with them.

However, since they are a regulated brokerage and such they do 'real' KYC verification like checking drivers license numbers against a database and your credit report addresses and such. If it's a 'real' amount of money it may be worth it to you to 'move' by borrowing a friend / relatives address out of state taking up residence there. But, you are talking about a lot of time to change your address to change it back to NY and the possible tax implications and so on.

If it's a smaller amount I would not loose that much sleep over it. Once the crypto markets bounce back, sell it and transfer the funds to someplace that does allow withdraw from NY.

Unlike a lot of places RH does have a fair amount of government oversight, so I would not worry about coins vanishing like other places.

-Dave

I called RH support a few months ago to discuss all this. I believe the issue is they have me officially registered as living in NY and I think I had to send my drivers license when setting up the account. I watched many youtube videos on how to transfer from one exchange to another...problem is my RH app doesn't even give me the transfer as an option which is shown in the videos. Like I needed ANOTHER reason to leave NY 

Get Proton VPN (or any other VPN) and set your location to some other USA city. They have no way to tell which state you live in because it's not on the passport. Unless you gave them your drivers license that is.

But then again, that would be a dick move from them if they georestricted all its users to the state they verified in.

You can also try transferring your coins to Gemini (which does allow NY residents), and withdraw to your cold wallet from there.

I am new to Crypto and I have been learning a lot over the past 6 months. I will briefly explain my current situation, then I will explain my problem.

I bought Ethereum on Robinhood (RH), mostly due to no fees but I didn't fully understand the crypto at that time. I now know about "not your keys, not your crypto". So I bought a Trezor cold wallet to hopefully store my ETH safely. I have a HODL type position on all this.

Then I found about this, a copy/paste from Robinhood's website: Robinhood Crypto transfers are currently available in every US state and the District of Columbia, except for Hawaii, Nevada, and New York. We’re working hard to make Robinhood Crypto available in those states as soon as possible. So because I live in NY (yuk!), I currently can not transfer my crypto from RH to a cold wallet. (...no jokes about just move to Florida and problem solved lol...someday though!)

So I now one option is to sell my ETH on RH, then buy into another exchange like Coinbase. One problem there is my ETH is currently below my original avg cost basis & I really don't want to realize the loss. I'm bullish long term & prefer to wait it out. I need the price to get back into the $1900's for me to breakeven.

So any input or advice on what i can do would be appreciated. I remind everyone again that I'm a newbie to the crypto world so my tech skills are limited but slowly increasing.The FTX implosion has me extra nervous now...but I also know getting my cryoto to a cold wallet is my ultimate goal.

Thanks in advance