Why Does Coinbase Need Your SSN? (Everything You Need To Know)

For a lot of people, the idea of just handing over your Social Security Number (SSN) to anyone online – even a legitimate crypto currency exchange like Coinbase – feels a little wrong.

Why does Coinbase need your SSN, anyway? Well, it turns out that Coinbase only needs the last four digits of your SSN (not the whole number) – and it needs that information to verify your identity and to comply with anti-money laundering rules, regulations, and laws around the world.

There are a couple of other reasons that Coinbase needs to see your SSN as well, but we dig deeper into that in the rest of this detailed guide.

What is Coinbase?

Coinbase is one of the world’s largest and most popular cryptocurrency exchanges.

With almost 90 million members (and hundreds of thousands more joining every few months), the popularity of this platform has skyrocketed in the last few years – and for good reason.

For one thing, Coinbase has proven time and time again that it is one of the most legitimate and reputable operations in the crypto space. That might not seem like a big deal, but with the amount of fly-by-night operations in crypto it’s a bigger deal than most people realize.

Secondly, Coinbase continuously invests in the services, features, and security of their platform.

In fact, Coinbase recently paid out a $250,000 bounty to a “white hat hacker” that had found a security flaw in their platform. That just goes to show you how seriously they take their security (and yours).

Of course, folks also love the fact that you can trade more than 100+ different cryptocurrencies on Coinbase today. It feels like they are adding new crypto options in the mix on a daily basis, too.

Why Does Coinbase Need Your SSN?

All that may be well and good when it comes to why so many people like Coinbase – but why do they need your Social Security Number?

Well, as we highlighted above, there are a couple of different reasons Coinbase needs the last four digits – and only the last four digits – of your SSN.

Identity Verification

For starters, Coinbase requires you to verify your identity when you create a new account on the platform.

Identity verification is mandated by the SEC, by FINRA rules and regulations, as well as by a whole host of other international anti-money laundering rules as well.

Not only is your last for digits of your Social Security number going to prove you are who you say you are, it’s also one of the fastest and easiest ways to knock out identity verification, too.

Account Security

Things happen all the time that could potentially compromise the safety and security of your Coinbase account, even though Coinbase invests heavily in cyber security upgrades.

But as long as you have a way to prove you are who you say you are – like by providing the last four digits of your SSN to confirm your identity – you’ll always have a way to recover your account.

On top of that, since Coinbase is one of the few crypto platforms on the planet that insures their cryptocurrency you won’t have to worry about any stolen crypto getting lifted from you for long.

Coinbase will reimburse you, but only after you have verified your ID using your SSN.

Taxes

A lot of people flooded into the crypto world to take advantage of a “new money” that would allow them to avoid paying taxes.

But it didn’t take long for the federal government in the United States (and governments around the rest of the world) to catch on, to put in new laws and regulations governing crypto, and to require crypto profits – and losses – be reported to the IRS.

In fact, this is a big part of why Coinbase requires you to provide the last four digits of your SSN.

Every year, Coinbase has to report your annual losses (as well as your annual games) directly to the IRS through a 1099 Form. You’ll have to include the same information when you file taxes for you’ll end up in hot water with this not much loved federal agency

Meet Industry Regulations

Finally, there are a lot of industry regulations (including the FINRA and SEC regulations we highlighted earlier) that require platforms like Coinbase to confirm the identity of their members.

Coinbase simply wouldn’t be legally allowed to operate if they didn’t collect this kind of information from each and every one of their account holders.

Is It Safe to Give Coinbase My SSN?

Now that we have squared all of that away, we can tell you that it’s just as safe to provide Coinbase with the last four digits of your SSN as it would be to provide that information to your bank.

That’s because Coinbase uses the exact same security, encryption, and cyber protection protocols that major financial institutions around the world leverage, too.

This isn’t like handing over your entire SSN to a complete and total stranger. That would be ill-advised.

Instead, think of this as providing the last four digits of your SSN just to confirm your ID with a financial institution on par with major banks.

If you would feel comfortable giving that information to those kinds of banks you can feel just as comfortable giving it to the folks at Coinbase.

Closing Thoughts

There are a couple of different reasons that Coinbase needs to see the last four digits of your Social Security number, including (but not limited to):

Identity verification
Account security
Tax reporting and
Compliance with industry regulations

In an ideal world (maybe sometime in the future), crypto really would become a fully decentralized form of money that didn’t require things like ID verification and the like.

Right now, though, the reality of the present is that one of the world’s largest – and most popular – cryptocurrency exchanges requires you to pony up ID verification information like the last four digits of your SSN for reason.

You can certainly choose not to provide them with that information. Just know that you won’t be able to use their platform until you do.

Take a look at our other most recent blog posts below:

Why Does Coinbase Need Your SSN? (Everything You Need To Know)