Not quite.Ĭrypto purchases are prohibited at a long list of merchant categories, including betting/casino gambling, internet gambling, online gambling, or gambling on dog and horse races-w hich is ironic considering crypto investing is a gambling activity itself. Merchant CategoriesĬoinbase says you can make crypto purchases anywhere that accepts Visa. This means that if you want to reinvest that money in Bitcoin or some other cryptocurrency, you’ll pay another 2.49% transaction fee, and you'll lose any rewards earned on the original transaction. If you return the purchased item, Coinbase will put the refunded amount in the USD wallet of your Coinbase account. If you consider taking the reward in Stellar Lumens you’ll have a whole other set of calculations to make involving the valuation of the cryptocurrency at the time of the transaction. If the price of Bitcoin drops in those intervening days, the value of your reward has diminished. Rewards aren’t paid out immediately-there can be a lag of up to a couple of days. That assumes the exchange rate on Bitcoin is the same when the reward pays out as it was at the time of the transaction. If you pay in Bitcoin and get the 1% Bitcoin reward, the effective rate of the transaction fee is only 1.49%. You’ll get some of that transaction fee back in the form of rewards, however. If you do, you’ll have to pay a 2.49% transaction fee because Coinbase sells users’ cryptocurrency each time they make a purchase, triggering the fee. Transaction Feeīut maybe you want to make a big ticket transaction, and you’ve calculated that it’s worth taking the tax hit and finance your purchase by cashing in some of your Bitcoin, Ethereum, Dogecoin, or other cryptocurrency. Tax attorney Guinevere Moore warns crypto investors of 10 crypto tax mistakes to avoid including: 1) Improperly reporting cryptocurrency received from air-drops, forks, and splits 2) Using the wrong form to report cryptocurrency transactions and 3) Failing to report crypto-to-crypto transactions. It’s easy to imagine that some users will say “I know there are tax implications-I’ll deal with them.” It may not be that simple. You will be required to report gains or losses from your use of the card on your tax return.” This means that each time you use your card and sell cryptocurrency, you will be have sold property in a taxable transaction. “The IRS classifies cryptocurrency as ‘property’ for tax purposes.
Taxesįirst-and foremost-are the tax implications. You’ll have to take a number of factors into consideration, including taxes, transaction fees, rewards, refunds, and accepted merchant categories. But doing it with the Coinbase debit card presents issues and concerns that many people will find hard to navigate. Ok, so consumers want to make retail purchases using their crypto holdings. You’ll Need a PhD in Statistics To Figure Out The Impact of Coinbase Debit Card Spending