But investments in cryptocurrency are not protected by either the SIPC or Robinhood.įinally, Robinhood ensures its users that their passwords and 'sensitive details' are encrypted. So if Robinhood went bankrupt, as an investor on that brokerage platform, your funds could be transferred to another brokerage firm or refunded to you. The SIPC can replace up to $500,000 for both securities and cash, including a $250,000 limit for cash only, in missing customer property. Note: The SEC doesn't offer protection to individual investors, nor the investments they make.Īdditionally, Robinhood is a member of the Securities Investor Protection Corporation, which offers financial protection if a brokerage firm were to fail. Otherwise, they face being hit with fines or civil lawsuits. And just like any other brokerage firm, Robinhood must abide by the fair practice regulations set by the SEC, including providing proof of fair dealings. The Securities and Exchange Commission requires these details to avoid fraud and especially risky investments. 'If you want to invest, even at the most reputable firms, you are going to have to give underlying personal information.' 'This isn't a Robinhood-specific requirement,' he says.

According to Nickolas Sanchez, a certified financial planner at Financial Architects, this is an entirely normal process to trade stocks under SEC guidelines. When setting up an account with Robinhood, users give their personal information - such as their age, net worth, income, and Social Security number.

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