Trading of certain stocks has been halted by Robinhood, a popular Crypto trading platform. Many users of the app are considering switching to some other application. While some users who tried moving to any other application just realized that Robinhood doesn’t offer a crypto withdrawal facility. The only way to exit is get cashed out.
This has put the platform user in a really difficult position. The users have to stick with Robinhood if they want to keep their digital assets. And if the users want to leave the platform, they have to sell their assets and can only withdraw cash. This puts the users in a very unfavorable condition where their cash would be eligible to unintended taxes.
Therefore, if a user doesn’t want to withdraw cash and still wants to keep investing, they have no other option. The users have to keep trading on Robinhood.
The other option is selling the assets and get the cash as earnings. Then use cash through another medium, application or exchange, to purchase your crypto assets.
The bad news is that the withdrawn amount with profits would be considered as earnings and will become subject to taxes. Capital gains tax would also be applicable on gains of $20,000 which is a high-rate tax. As the crypto market is really bullish these days and is on its high ends. Most of the users deciding to switch platforms would occur these tax liabilities.
However, those investing in crypto exclusively through exchanges would totally bypass this issue with deposits and withdrawals. Those trading through exchanges can directly transfer their coins from one wallet to another of their choice wallet. As the crypto asset are never cashed and directly transferred, they do not fall within the tax regime.
For a long time, Robinhood had been bringing large group of investors to invest into cryptocurrencies. The user-friendly interface of Robinhood had attracted many new users to choose this platform over others. The interface is so simple that the user does not have to worry about the complexity of storing the assets. It also presents various other complex features in a very simple form for users to interact. Which is quite opposite to the complex and time-consuming methods offered by traditional crypto exchanges.
Unfortunately, all that glitters is not good and Robinhood had its drawbacks which in this scenario, is a huge one.