Why Do Crypto Exchanges Need Your Social Security Number?

Were you thinking about setting up a crypto exchange account but had questions when filling out your profile? If you’re new to crypto exchanges, it might seem weird that they ask for your social security number. Should you give them this personal information? 

Every crypto exchange will need your SSN to confirm that you live in the United States. The number also identifies you for tax purposes. However, you still need to research the platform first. You should only share your SSN with secure platforms, so your data doesn’t get leaked. 

Crypto exchanges need your social security number to ensure that you’re allowed to trade with them. You won’t be able to work around giving it to them because it’s a federal regulation, so when you go to make your account, you’ll want to have your SSN nearby. If you still have questions about sharing your SSN with a crypto exchange, read on to learn more. 

Why Crypto Exchanges Need Your Social Security Number

There are a few different reasons why a crypto exchange will ask for your SSN. 

For one, it’s essential to identify you. This ensures that platforms don’t have to worry about individuals with bad intentions making fake accounts and posing as other people and helps keep the platform safe. 

When a crypto exchange asks for your SSN, they aren’t trying to steal your identity or information. It’s important to know that every platform will ask for your number. However, you need to make sure that you’re safe online and only give the number to reputable websites.

There are a couple of other reasons why the platform wants this information from you. These include: 

To Confirm Your Location

First of all, the crypto exchange needs to make sure that you’re a United States citizen or resident. Many platforms can’t work with those living outside the country for legal reasons. Additionally, some international crypto exchanges are not allowed to operate in the US. 

Plus, some states have different laws regarding crypto trading. For example, New York has stringent rules when it comes to cryptocurrency. These laws could change over time, so you’ll want to stay current on the details if you live in New York.

SSNs are only given to United States citizens or residents, so they help to identify you on the platform and allow the exchange to confirm you’re an American citizen.

Identification Reasons

Additionally, providing your SSN ensures you are who you’re saying you are when you make an account. That way, it’s extremely difficult to pretend to be someone else on the crypto platform. It also means that you don’t have to worry about others creating accounts in your name, either.

Overall, requiring your social security number makes the platform more secure. There should be fewer instances of bots and imposters on the website because of it, giving you a better, safer trading experience in the world of crypto!

Tax Information

Finally, the government requires the platform to ask for your SSN. If the exchange does not have your SSN, they can’t issue a 1099 tax form. You need this form every year while using a crypto exchange account. Having your SSN on file makes it easier for them to track your trades for tax purposes. 

Every platform in the United States will enforce this rule because of taxes. You and the exchange must fill out your tax information correctly, so you don’t get in trouble. Plus, the crypto platform doesn’t want to get in trouble either! 

Is It Safe To Give Crypto Exchanges Your SSN?

Next, you’re probably wondering if it’s safe to give crypto exchanges your SSN. We often do our best to keep this number safe from prying eyes, so it feels strange to give it to websites. However, if you want to make an account, you won’t have a choice.

It is safe to give crypto exchanges your SSN. Opening an account at a crypto exchange is just like opening a new account at a bank. Both options have many levels of security to protect them. However, you should first make sure you’re using an honest, trustworthy platform before sharing your SSN. 

There have been instances of fake cryptocurrency exchanges on the internet. If you don’t want to lose your personal information and money, you always need to check that the platform is legitimate before entering anything on site. 

Signs of Fake Crypto Exchanges

To start, Googling the crypto exchange first can go a long way. If there doesn’t seem to be any information about the business online, you should stay far away from it! 

You should also watch out for promises that sound too good to be true. For example, if the platform offers you guaranteed returns that seem impossibly good, it’s probably fake. Scam websites often guarantee returns in the first few days of setting up your platform – and these results are, in most cases, impossible.

Additionally, if you can’t find any published code anywhere, it’s likely a fake exchange. Legitimate exchanges always make their code open source. Open-source codes mean that they are available to read, so everyone can check that the platform is what it says it is. 

There have been a few cases of crypto exchanges disappearing overnight after making promises to people, and you never want to find yourself caught up in that. It’s best to do your own background check into the site before signing up.

Final Thoughts

Every crypto exchange platform will need your social security number when you sign up, and you can expect to be asked for this information with every new account you make. This is similar to how a bank works when you open a new account with them.

Platforms need your SSN to report your tax information, identify you, and meet federal regulations. However, you should research the platform before you provide them with any data. It is pretty easy to get fooled by scam crypto platforms, so you should always be confident in their authenticity before providing them with your SSN.

Why Do Crypto Exchanges Need Your Social Security Number?
Why Do Crypto Exchanges Need Your Social Security Number?