Why do Crypto exchanges ask for so many documents?
When you apply to a crypto exchange with an IRA LLC or solo 401(k) trust, you get the most flexibility to handle your own cryptocurrency, but must apply through "entity onboarding". If a financial firm or hedge fund is applying, they would have to go through the same onboarding.
It's important you go here and not individual onboarding. Going to individual onboarding can receive tax reporting, which would tie you cryptocurrency or investment gains to your social security number.
Because onboarding representatives might have spoken to a few large financial firms before you, they might ask for certain documents. If you are going to someone not on the Rocket Dollar partner's page, know that they might continuously ask for documents or be unfamiliar with tax reporting in an IRA.
Terms to Know
"Know your customer" laws have been around since the Patriot Act in 2001. They are extensive for financial services, so that financial services companies know who their customers they work with and where their funds are coming from before they do business on the platform. An investment issuer could ask for additional information on you as a person, an entity, or a business before they allow you to use the platform. Centralized Crypto exchanges now need extensive KYC information for almost all customers. It is best to answer requested information truthfully, delaying could slow down your investment experience.
A capital table showing the different investment or ownership levels of a company. This is useful for bigger corporations owned by multiple people, but does not apply to your IRA as it is an IRA LLC. Be aware some crypto exchanges, especially Coinbase, will not let you proceed unless you provide detailed answers (some suggestions are below) or a document on company letterhead with your IRA LLC. Rocket Dollar does not provide these documents, as they are unnecessary for any company. Our Sales and Partnerships team is happy to explain with a certain investment issuer the nuances of an IRA LLC, but Coinbase is not willing to make exceptions and will continuously demand documents.
A list of directors and leaders of the company, who might have significant sway over company operations and decision making. As you are the manager of your IRA LLC, there are no other officers, directors, or people who will have control over your IRA LLC that you need to worry about putting down on applications.
Authorized Representative List
This is very simple. Who will be able to log into your online account and exert authority, like cryptocurrency trades or money movements. This should be ONLY you or a trusted party, such a spouse or someone that has power of attorney. Due to the nature of cryptocurrency, know that a malicious actor or family member can drain the entire account by accessing it if they are motivated to do so. When you inform a cryptocurrency exchange or other investment issuer of another "authorized representative" only approve your most trusted parties. If there is any doubt or pressure that is making you feel uncomfortable, do not include someone unless it is 100% necessary for your account goals.
Proof of Address
To add to know your customer laws, investment issuers may ask for proof of address just like a bank does. Know that your IRA LLC does not have usual documents that an investment issuer might seek for operating companies, such as a company utility bill at auto repair shop, or a lease agreement for a financial firm. Your IRA LLC or Solo 401(k) is always "headquartered" at the address you gave at Rocket Dollar signup, which for most customers is their home address. You can provide personal proof of address, and a screenshot from the Colorado secretary of state website.
Responses you can send about your IRA LLC
- Shareholders Register the LLC is a single-member LLC owned by my Bank United FBO [Insert Your Name] Traditional/Roth IRA. There are no shareholders, the 100% owner is my IRA at Rocket Dollar and their custody partner Digital Trust & Bank United. The sole purpose of the Colorado LLC is to hold my IRA investments like those I'm going to acquire. I am the 100% Beneficial owner of my IRA. I have also attached a screenshot of the ownership structure to add additional clarity.
- Director Register - I am the manager of the LLC as I will be handling my own IRA investments and all crypto trades. There is no Director's Register and there will never be any other directors, managers, board members of the Colorado LLC corporation.
- Authorized Representative List - I will be the only user, trader, and investor using my Rocket Dollar IRA (and Colorado LLC that goes with it) There will never be any other authorized users other than myself.
- Please provide proof of address - the LLC is a single-member LLC inside of my IRA. The business address is my home address. Here is a screenshot taken from the Colorado Secretary of State Website. Since there is no business activity other than my IRA investments, there will never be LLC phone bills, utility bills, bank statements, or paystubs. I can provide personal proof of address like examples X and Y here.