Robinhood is in the news for its most recent IPO, but it’s frequently top of mind for security clearance holders for other reasons. Robinhood has made it easier than ever to invest, and that includes the kinds of cryptocurrencies that frequently give security clearance holders pause. From Bitcoin to Dogecoin and all of the other emerging cryptocurrencies, there are a number of security clearance holders adding ‘unconventional’ investments to their portfolio, and increasing questions about whether those investments may cause security clearance eligibility issues.
Robinhood is known for empowering (then crushing) the GameStop stock phenomenon with its free stock trading app, as well as its CEO’s banter with Elon Musk and its easy cryptocurrency trading abilities. The app itself doesn’t have direct ties to cryptocurrencies – investors on Robinhood can partake in a variety of investing and trading options using the app. The issue for security clearance holders comes with the breadth of investing options and relative ease of use. The site can quickly become as more of a game, entertainment, or obsession than an investment tool. That brings risks heftier than simply turning over funds to a mutual fund or 401(k).
Want to Invest? Stay in Good Graces with the IRS
Unlike marijuana stocks, which security clearance policy directly prohibits as ‘drug involvement,’ Bitcoin has stayed off of the prohibited investments list. (But remember, this is a don’t ask, don’t tell situation – if you have a mutual fund, you don’t need to start going line-item by line item to make sure there isn’t a ‘concerning’ stock in there). The issue that comes up is in how – or if – the investments are reported to the IRS. Just because the app makes investing as easy as a game doesn’t mean the money spent is child’s play. Investments made on Robinhood – whether crypto or traditional stocks – still need to be reported to both the IRS and in the course of a security clearance investigation. It’s common for investigators to ask about any investments if you’re subject to a personnel subject interview. They’re not just talking about your 401(k) or employer portfolio – if you’ve invested in your brother’s plumbing business or thrown a couple of hundred dollars into an investment in Robinhood, you need to report it.
Finally, make sure any investments don’t put your overall financial health in jeopardy. Financial issues continue to be the number one issue resulting in security clearance denial and revocation. As continuous evaluation and continuous vetting roll out to the majority of security clearance holders, financial red flags may come up in automated checks. If the gamification of your investment portfolio causes you to lose more than you can afford to, you may lose your security clearance along with your money. Think carefully about any investments and remember the volatility of many investments – particularly those of an online app/day trading variety.
If you’re planning any significant investments – via Robinhood or any other app – your best bet is to consult with a financial advisor first. If you’re a hobbyist, set a budget before you start (just like gambling at the casino) – and if you lose it all, don’t re-up.