Coinbase ID verification

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
69XR7
Posts: 6
Joined: Wed Jan 24, 2018 1:15 pm

Coinbase ID verification

Post by 69XR7 »

I've been thinking about dipping my toe into crypto and was looking for the easiest way to put a little play money into it.

After following and reading many threads here it seems like Coinbase/Coinbase Pro may be the best way for me to get started.

I created an account on Coinbase, but found that I really can't do much of anything until I verify my ID and for some reason the idea of giving them all this info just stopped me cold.

Am I being overly cautious? Is giving them a picture of my ID just inviting identity theft?
Cyclone
Posts: 302
Joined: Sun Jan 10, 2010 9:48 pm

Re: Coinbase ID verification

Post by Cyclone »

It's like any other financial institution. Of course you have to prove your identity.
Topic Author
69XR7
Posts: 6
Joined: Wed Jan 24, 2018 1:15 pm

Re: Coinbase ID verification

Post by 69XR7 »

I’ve opened new accounts at Ally, Marcus & Fidelity in the past couple years and my wife has also opened accounts at Ally & Marcus. None of these required a scan of an ID and face.
Nummerkins
Posts: 548
Joined: Tue Jun 01, 2010 4:41 pm

Re: Coinbase ID verification

Post by Nummerkins »

Every single crypto broker does this. You have KYC and anti-money laundering laws to thank for it.
Today's high is tomorrow's low.
User avatar
JoMoney
Posts: 11560
Joined: Tue Jul 23, 2013 5:31 am

Re: Coinbase ID verification

Post by JoMoney »

69XR7 wrote: Wed May 05, 2021 7:00 pm I’ve opened new accounts at Ally, Marcus & Fidelity in the past couple years and my wife has also opened accounts at Ally & Marcus. None of these required a scan of an ID and face.
Sometimes they can verify you other ways. If they can't, it's not uncommon fro banks to require you scan/send copies to verify identity. I've had to do it with Capital One 360 and with a foreign exchange/transfer service I used to use. As others have said, the "Know Your Customer" requirement is in the banking act laws and required of any "money service business".
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Jack FFR1846
Posts: 13709
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Coinbase ID verification

Post by Jack FFR1846 »

This isn't new. DW had to go to a Schwab office with passport to verify her identity about 5 years ago when opening an account. We could have sent documents but it was just easier to drop in.
Bogle: Smart Beta is stupid
wmvink
Posts: 99
Joined: Sat Apr 13, 2013 12:44 am

Re: Coinbase ID verification

Post by wmvink »

If you don't trust the country's largest crypto broker - which is listed on the NASDAQ and has a market cap of $50B - then I would say you're probably not ready to get into crypto. As a 'safe' alternative you could consider buying a crypto trust like GBTC in your existing brokerage account.
User avatar
CardinalRule
Posts: 695
Joined: Sun Jan 15, 2017 11:01 am
Location: United States

Re: Coinbase ID verification

Post by CardinalRule »

wmvink wrote: Wed May 05, 2021 10:25 pm If you don't trust the country's largest crypto broker - which is listed on the NASDAQ and has a market cap of $50B - then I would say you're probably not ready to get into crypto. As a 'safe' alternative you could consider buying a crypto trust like GBTC in your existing brokerage account.
That's a good point about the size and financial integrity of Coinbase. Like the OP, I stopped at the point where the Coinbase app asked for a digital copy of my driver's license. I was worried about ID theft, and probably overthinking it. I have just never had to provide my driver's license when opening other online accounts - brokerages, banks, etc. I haven't gone back to the verification process, as I was just going to play around with a small amount, mostly for curiosity and learning, but perhaps I will.
investorpeter
Posts: 223
Joined: Sun Jul 31, 2016 5:46 pm

Re: Coinbase ID verification

Post by investorpeter »

Yes, that is being overly cautious. Every time you check into a hotel or rent a car you have to show your ID, and they often take a photocopy of it as well.

In my mind, the major security issue to consider with Coinbase (or any crypto-based business) isn't ID theft, but the lack of recourse in the event of crypto asset loss.
Freefun
Posts: 807
Joined: Sun Jan 14, 2018 3:55 pm

Re: Coinbase ID verification

Post by Freefun »

This is required by law. How companies do this is up to them. That Ally didn’t ask for face scan or DL doesn’t mean they’re not complying but rather their implementation is different. I don’t know of any US bank that doesn’t require your SS and I’m fairly certain everyone will check your credit (most do soft pulls).
Remember when you wanted what you currently have?
SlowMovingInvestor
Posts: 2808
Joined: Sun Sep 11, 2016 11:27 am

Re: Coinbase ID verification

Post by SlowMovingInvestor »

Freefun wrote: Thu May 06, 2021 7:26 am I don’t know of any US bank that doesn’t require your SS and I’m fairly certain everyone will check your credit (most do soft pulls).
Not exactly credit checks. Banks typically do a pull with ChexSystems or the like, which return information on issues related to deposit accounts such as bounced checks etc.

Requiring scans of IDs -- I do remember the occasional online bank/brokerage that asks for them. I suppose Coinbase is being stricter because it's in a new field and wants to avoid any reputational risk.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Freefun
Posts: 807
Joined: Sun Jan 14, 2018 3:55 pm

Re: Coinbase ID verification

Post by Freefun »

SlowMovingInvestor wrote: Thu May 06, 2021 7:40 am
Freefun wrote: Thu May 06, 2021 7:26 am I don’t know of any US bank that doesn’t require your SS and I’m fairly certain everyone will check your credit (most do soft pulls).
Not exactly credit checks. Banks typically do a pull with ChexSystems or the like, which return information on issues related to deposit accounts such as bounced checks etc.

Requiring scans of IDs -- I do remember the occasional online bank/brokerage that asks for them. I suppose Coinbase is being stricter because it's in a new field and wants to avoid any reputational risk.
Everyone will do a soft pull (what they're pulling is up to them).

Institutions have risk management policies. These policies define processes needed based on 1) timing, 2) asset type, 3) amount, 4) geography.

That most banks require SS with soft pull reflects the predominant nature of relatively moderate amounts of USD transactions. If you try to move large amounts of USD in domestic banks this will usually result in triggering more levels of risk management. A normal bank that decides to manage crypto may have more stringent risk management policies since it's a different asset type with different potential risks.
Remember when you wanted what you currently have?
User avatar
Blueskies123
Posts: 711
Joined: Sat Nov 15, 2014 7:18 pm
Location: South Florida

Re: Coinbase ID verification

Post by Blueskies123 »

If you want to dip your toe with only Bitcoin, the cash app is the simplest way to go. It's also the cheapest for small transactions.
If you find yourself in a hole, stop digging
SlowMovingInvestor
Posts: 2808
Joined: Sun Sep 11, 2016 11:27 am

Re: Coinbase ID verification

Post by SlowMovingInvestor »

Freefun wrote: Thu May 06, 2021 7:56 am
That most banks require SS with soft pull reflects the predominant nature of relatively moderate amounts of USD transactions. If you try to move large amounts of USD in domestic banks this will usually result in triggering more levels of risk management. A normal bank that decides to manage crypto may have more stringent risk management policies since it's a different asset type with different potential risks.
Definitely. As a potential off ramp for crypto into real $, it's not surprising that Coinbase would have more stringent rules than a traditional bank/brokerage.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
User avatar
Nate79
Posts: 7178
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Coinbase ID verification

Post by Nate79 »

This is a really good sign that Coinbase is doing this. Glad to hear they are taking these responsibilities seriously.
wmvink
Posts: 99
Joined: Sat Apr 13, 2013 12:44 am

Re: Coinbase ID verification

Post by wmvink »

Nate79 wrote: Thu May 06, 2021 8:40 am This is a really good sign that Coinbase is doing this. Glad to hear they are taking these responsibilities seriously.
I think they know that if they chose not do this (i.e. chose to break anti-money laundering laws), their stock would come crashing. It's still cheaper to implement KYC checks than to expose yourself to all the legal risk that comes with breaking US banking laws.
Gadget
Posts: 752
Joined: Fri Mar 17, 2017 1:38 pm

Re: Coinbase ID verification

Post by Gadget »

Nate79 wrote: Thu May 06, 2021 8:40 am This is a really good sign that Coinbase is doing this. Glad to hear they are taking these responsibilities seriously.
Every crypto exchange is doing this to comply with US laws.

I had to do the same things on Binance.us, Voyager, Kraken, Gemini, BlockFi, etc. Binance.us even couldn't verify me online, and it sat there for 4 months to verify until a human could review it because they were so backlogged.

It amazes me that half the threads here still discuss all the illegal uses for crypto. I can't imagine how you could dodge taxes or do illegal things for too long when every exchange knows who you are with a verified identity, and the blockchain exists forever. So if you send anything from one verified wallet to any other wallet, that instantly ties your identity to that wallet. It's all just pseudo anonymous. It's got to be the IRSs/regulators dream.

In other words, just because average Joe couldn't track my crypto, you better believe the IRS can and does with help from companies like Palantir. Or at the very least, they are setting up the infrastructure to. Which to most bogleheads is no issue at all. We are all about tax efficiency, but we all pay what is required to the IRS. Some of the people on reddit thinking they are dodging taxes are in for a rude awakening in the future I bet though.
SlowMovingInvestor
Posts: 2808
Joined: Sun Sep 11, 2016 11:27 am

Re: Coinbase ID verification

Post by SlowMovingInvestor »

Gadget wrote: Thu May 06, 2021 9:24 am
It amazes me that half the threads here still discuss all the illegal uses for crypto. I can't imagine how you could dodge taxes or do illegal things for too long when every exchange knows who you are with a verified identity, and the blockchain exists forever. So if you send anything from one verified wallet to any other wallet, that instantly ties your identity to that wallet. It's all just pseudo anonymous. It's got to be the IRSs/regulators dream.

In other words, just because average Joe couldn't track my crypto, you better believe the IRS can and does with help from companies like Palantir. Or at the very least, they are setting up the infrastructure to. Which to most bogleheads is no issue at all. We are all about tax efficiency, but we all pay what is required to the IRS. Some of the people on reddit thinking they are dodging taxes are in for a rude awakening in the future I bet though.
The IRS issued John Doe summons to some exchanges recently, and has issued them to CoinBase in the past. [ A John Doe summons is a request for bulk data on a large unknown set of users. ]. But I wouldn't be surprised in the least if there is a very significant amount of tax underreporting going on with the decentralized exchanges, where there is no KYC/AML.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Gadget
Posts: 752
Joined: Fri Mar 17, 2017 1:38 pm

Re: Coinbase ID verification

Post by Gadget »

SlowMovingInvestor wrote: Thu May 06, 2021 9:31 am
Gadget wrote: Thu May 06, 2021 9:24 am
It amazes me that half the threads here still discuss all the illegal uses for crypto. I can't imagine how you could dodge taxes or do illegal things for too long when every exchange knows who you are with a verified identity, and the blockchain exists forever. So if you send anything from one verified wallet to any other wallet, that instantly ties your identity to that wallet. It's all just pseudo anonymous. It's got to be the IRSs/regulators dream.

In other words, just because average Joe couldn't track my crypto, you better believe the IRS can and does with help from companies like Palantir. Or at the very least, they are setting up the infrastructure to. Which to most bogleheads is no issue at all. We are all about tax efficiency, but we all pay what is required to the IRS. Some of the people on reddit thinking they are dodging taxes are in for a rude awakening in the future I bet though.
The IRS issued John Doe summons to some exchanges recently, and has issued them to CoinBase in the past. [ A John Doe summons is a request for bulk data on a large unknown set of users. ]. But I wouldn't be surprised in the least if there is a very significant amount of tax underreporting going on with the decentralized exchanges, where there is no KYC/AML.
I agree with this. But if you read about the new Palantir contract with the IRS, I forget what it is called, I bet they can track DeFi too now. They know that your crypto went to a DeFi exchange, and at a minimum you created a taxable event there that must be reported. But I bet they can also tell what you exchanged to with a few tricks. It's not like the blockchain data is hidden.
Cunobelinus
Posts: 226
Joined: Tue Dec 04, 2012 5:31 pm

Re: Coinbase ID verification

Post by Cunobelinus »

CardinalRule wrote: Thu May 06, 2021 6:58 am
wmvink wrote: Wed May 05, 2021 10:25 pm If you don't trust the country's largest crypto broker - which is listed on the NASDAQ and has a market cap of $50B - then I would say you're probably not ready to get into crypto. As a 'safe' alternative you could consider buying a crypto trust like GBTC in your existing brokerage account.
That's a good point about the size and financial integrity of Coinbase. Like the OP, I stopped at the point where the Coinbase app asked for a digital copy of my driver's license. I was worried about ID theft, and probably overthinking it. I have just never had to provide my driver's license when opening other online accounts - brokerages, banks, etc. I haven't gone back to the verification process, as I was just going to play around with a small amount, mostly for curiosity and learning, but perhaps I will.
I got frustrated at that point too and gave up the second time around.

I first opened an account and thought Coinbase was going to accept a Federally-issued ID (passport) as a form of identification, but Coinbase later terminated my account without notice after I didn't turn off my VPN prior to logging in. Apparently not providing a state-issued driver's license was a red flag and logging in from a VPN was another red flag.

I was temporarily residing in a different state from the one where my driver's license was issued, but they blocked me from creating an account with an IP address located in the state that I was temporarily in, so I created an account via a VPN to get around that odd "feature" of Coinbase. I'm also not keen on sharing my driver's license info if I can avoid it. As no other financial institution had ever required a copy of my driver's license, I was disinclined to give it to Coinbase -- this was a few years ago.

I tried to argue the point and state that I was a legitimate customer, but Coinbase refused to engage with any questions and refused to reinstate my account. I suppose I was on a persona non grata list at that point, because when I tried to create a second account a month or so later, Coinbase deleted it without notification after I again uploaded a passport and not a state-issued driver's license. I'm still not sure why a state-issued driver's license is the key to being able to open a cryptocurrency account -- they had a linked bank account, an address, a SSN (and credit check too, I suppose?), a passport. Whether or not I am licensed to drive in a particular state seems to be an odd requirement for cryptocurrency. A driver's license does not prove state residency.

Not worth the effort to me, for something that I was just going to explore.
wmvink
Posts: 99
Joined: Sat Apr 13, 2013 12:44 am

Re: Coinbase ID verification

Post by wmvink »

Cunobelinus wrote: Thu May 06, 2021 8:53 pm
CardinalRule wrote: Thu May 06, 2021 6:58 am
wmvink wrote: Wed May 05, 2021 10:25 pm If you don't trust the country's largest crypto broker - which is listed on the NASDAQ and has a market cap of $50B - then I would say you're probably not ready to get into crypto. As a 'safe' alternative you could consider buying a crypto trust like GBTC in your existing brokerage account.
That's a good point about the size and financial integrity of Coinbase. Like the OP, I stopped at the point where the Coinbase app asked for a digital copy of my driver's license. I was worried about ID theft, and probably overthinking it. I have just never had to provide my driver's license when opening other online accounts - brokerages, banks, etc. I haven't gone back to the verification process, as I was just going to play around with a small amount, mostly for curiosity and learning, but perhaps I will.
I got frustrated at that point too and gave up the second time around.

I first opened an account and thought Coinbase was going to accept a Federally-issued ID (passport) as a form of identification, but Coinbase later terminated my account without notice after I didn't turn off my VPN prior to logging in. Apparently not providing a state-issued driver's license was a red flag and logging in from a VPN was another red flag.

I was temporarily residing in a different state from the one where my driver's license was issued, but they blocked me from creating an account with an IP address located in the state that I was temporarily in, so I created an account via a VPN to get around that odd "feature" of Coinbase. I'm also not keen on sharing my driver's license info if I can avoid it. As no other financial institution had ever required a copy of my driver's license, I was disinclined to give it to Coinbase -- this was a few years ago.

I tried to argue the point and state that I was a legitimate customer, but Coinbase refused to engage with any questions and refused to reinstate my account. I suppose I was on a persona non grata list at that point, because when I tried to create a second account a month or so later, Coinbase deleted it without notification after I again uploaded a passport and not a state-issued driver's license. I'm still not sure why a state-issued driver's license is the key to being able to open a cryptocurrency account -- they had a linked bank account, an address, a SSN (and credit check too, I suppose?), a passport. Whether or not I am licensed to drive in a particular state seems to be an odd requirement for cryptocurrency. A driver's license does not prove state residency.

Not worth the effort to me, for something that I was just going to explore.
State regulations around crypto change every now and then. For example, right now the regulatory framework in Hawaii makes it difficult for firms like Coinbase to comply with their laws (see here).

Of course you could argue Coinbase could just ignore the law, but they probably did the math and decided it's cheaper to refuse service to customers from that state. You may not be from Hawaii but this is just one example. New York has its fair share of issues too.

This is similar to how many foreign banks refuse service to US persons because of the draconian FACTA reporting requirements.
waterface2
Posts: 1
Joined: Thu May 06, 2021 10:48 pm

Re: Coinbase ID verification

Post by waterface2 »

This is 100% the case. With Hawaii and New York treating exchanges as targets for litigation, Coinbase and other exchanges have to protect themselves from individuals who attempt to work around their restrictions and open up Coinbase to litigation. Passports don't show a residential address so they are tricky for verifying a state residence.

Also any use of VPN will/should result in some risk flags when used on financial services. I want all of my finance apps to detect abnormalities in login attempts. They should ensure that if my account is somehow compromised and accessed by someone in Russia they halt outgoing txs...
L. H.
Posts: 18
Joined: Fri Apr 30, 2021 9:14 pm

Re: Coinbase ID verification

Post by L. H. »

I just set up a Coinbase account this week and ran into the same issue with IDs. I ended up giving the ID verification after I looked into the legitimacy. What I did NOT do was to use Plaid to link my bank account. Plaid has known security issues (they basically keep your bank's login information and use it to data mine you). I would only link a bank account manually (which I have yet to be able to do).

I keep a separate free/no fee checking account with only a small amount (like $50) in it specifically for these sort of transfers. The bank account is set up specifically to fail to allow overdrafts and just bounce requests if there aren't sufficient funds, so that there is no chance of large amount of money being drained if that information were to be misused. That might be overkill, but lets me feel better about linking my account.

On Coinbase itself: I did several training courses (had to wait a day before I became eligible to take them) and "earned" $30-something in various crypto currency, got a $5 Bitcoin reward for setting up the account (took several days to post, but is there now), and according to the tracker, the value of my "investments" :? has gone up by about $1 so far.

My research on taxes on this say that I need to leave everything in place for a full year to avoid capital gains tax so I'm just leaving it and seeing what happens for kicks-and-giggles. Wouldn't have probably done it at all except that it was free, and I was curious. :)
User avatar
watchnerd
Posts: 9113
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Coinbase ID verification

Post by watchnerd »

69XR7 wrote: Wed May 05, 2021 4:49 pm I've been thinking about dipping my toe into crypto and was looking for the easiest way to put a little play money into it.

After following and reading many threads here it seems like Coinbase/Coinbase Pro may be the best way for me to get started.

I created an account on Coinbase, but found that I really can't do much of anything until I verify my ID and for some reason the idea of giving them all this info just stopped me cold.

Am I being overly cautious? Is giving them a picture of my ID just inviting identity theft?
I have mine set up with a TFA authenticator app.

I've had my Coinbase account for 4 years.

I don't think I was ever asked for picture ID way back when, but maybe I just don't remember.
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
User avatar
orthros
Posts: 492
Joined: Fri Feb 23, 2007 7:56 pm
Contact:

Re: Coinbase ID verification

Post by orthros »

Not really getting the concern around sharing your driver's license. You have to show it tons of places these days and it's not exactly secure.

It's kind of the same discussion around your checking account routing # and checking account #. It's on every single check you write - it's not a state secret.

I would be 1000x more wary handing out my SS # which I believe every single financial institution requires these days. And if they're a reputable institution you will not be able to open an account of any type without submitting it.
Crmck26
Posts: 62
Joined: Thu May 14, 2020 9:28 pm

Re: Coinbase ID verification

Post by Crmck26 »

As a criminal defense attorney- ever buy beer or cigarettes? Not that hard for the cashier to memorize the pertinent info on your ID. More intelligent criminals have card skimmers. And the bold are taking your mail, printing checks off your account once they get that info and paying some homeless guy to go cash it. I wouldn’t worry about CoinBase having a copy of your ID. At least you know who to sue if they have a breach!
SlowMovingInvestor
Posts: 2808
Joined: Sun Sep 11, 2016 11:27 am

Re: Coinbase ID verification

Post by SlowMovingInvestor »

L. H. wrote: Fri May 07, 2021 12:22 am I just set up a Coinbase account this week and ran into the same issue with IDs. I ended up giving the ID verification after I looked into the legitimacy. What I did NOT do was to use Plaid to link my bank account. Plaid has known security issues (they basically keep your bank's login information and use it to data mine you). I would only link a bank account manually (which I have yet to be able to do).
I'm not familiar with CoinBase's linking methods, but my impression was that when Plaid is used to setup the original link, it's only a one time link to verify the other account. Once that is done, it's like a manual link.

Note that financial institutions can do their own ACH once the link is verified, so they don't need Plaid any more. Indeed many say they wouldn't be storing your login info when you set the link up (but I don't recollect if they specifically say a 3rd party wouldn't be storing it either). However, if you are connecting a non financial institution, then they may be using Plaid for all ACH transfers.

But I could be wrong -- I welcome further comments on this, even though it's not Coinbase specific.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Post Reply