– The good news for would-be Coinbase debit card users is that the company has made some improvements to the card regarding transaction fees, rewards, and funding.
– The changes to the program are a good step forward, but they dontand probably could neveraddress a big pitfall to paying with crypto: The tax implications.
– The tax implications to paying with cryptocurrencies through a Coinbase debit card is (and should be) a deal killer for many consumers.
– According to Coinbases website: The IRS classifies cryptocurrency as property for tax purposes. This means that each time you use your card and sell cryptocurrency, you will be have sold property in a taxable transaction. You will be required to report gains or losses from your use of the card on your tax return.
– In addition, the tax implications of getting paid in cryptoin order to load funds onto a Coinbase debit cardare complicated.
– Additional negatives to paying with the Coinbase Debit card include refunds and choice of merchants.
– Bottom line: Coinbase has made it more convenient to use its debit card to use crypto to make retail purchases, but its probably not worth the effort.
– Whether its intentional or not, current tax laws discourage the use of cryptocurrencies to make everyday retail purchases. Thats good news for banks who issue debit cards and credit cards and earn interchange fees from the transactions on those cards.
– Changes to the crypto tax lawsand loosening of transaction deterrents like dollar limits and merchant restrictionsmight have a negative impact on banks fee revenue.