Coinbase Card Set for Tests, But the IRS is Watching
When Shift Card, Coinbase’s crypto debit card provider shut down in a huff earlier this year, it left a gaping hole that Coinbase has quickly covered with the Coinbase Card. Launched first in the UK, the card has enabled its users to seamlessly exchange crypto to GBP in an instant for withdrawal on ATMs or for payments in thousands of stores nationwide.
The debit card issued by PaySafe can be managed via Coinbase’s card app that is linked to a crypto user’s account. The app is both iOS and Android compatible and allows users to seamlessly swap between wallets as it supports assets listed on the Coinbase platform meaning users can shop using their ETH or BTC.
from the app, a shopper will receive receipts for payments and transaction
summaries as well. In short, what the
card simply do is to allow crypto holders to efficiently operate in the legacy
financial market making the crypto mass adoption dream more valid by the day.
Critics against Huge Coinbase Card Fees
To use the debit card in the UK, some transactions fees will
be charged, a price that is not common with usual Visa transactions of the domestic
kind. The card issuing, for example, costs $6.48, and there will be a charge of
2.49 percent per purchase.
When this cost is split up, it adds up to 1 percent per
purchase for transaction fees and a 1.49 percent for crypto to fiat conversion
fee. To reverse a transaction, the debit cardholder will be forced to part with
$26.19 while the spending limit is capped at a daily $13,092.
Skeptics are however not impressed, describing these rather exorbitant charges as Coinbase’s attempt to milk profits from transactions. They decry the huge margins charged on transactions and advise crypto users to ditch the card and rely on the internet. In fact, a Redditor seem to remind the community that Bitcoin and crypto is in essence internet money eliminating middle men;
Lex Sokolin formerly of Autonomous Research adds to the
criticism saying that:
“Riding the open loop networks of Visa and MasterCard is a faster way to market, but not a transformational one in terms of industry economics.”
However, Zeeshan Feroz, the Coinbase UK CEO countered saying the mission of the exchange is to make it easy to spend and use crypto “to create a more open financial system.”
“Customers can use their card in millions of locations around the world, making payments through contactless, Chip and PIN, as well as cash withdrawals from ATMs.”
IRS Watching Crypto Spenders
The usage of the Coinbase Card in the US is going to more expensive than in the UK because there are capital tax gains to consider. The US taxman requires all crypto asset investors, Hodlers included to evaluate each crypto transaction and vet it for taxation thoroughly. There are taxes for instance paid for crypto to fiat conversions, as well for shopping using digital tokens.
Simple transactions such as purchasing one token with the other and the reception of mined tokens are taxable as well. The IRS has gone as far as requiring the taxation of airdrops as well. So, if these tax costs are combined with the transaction costs of using the Coinbase Card, the card might prove to be too expensive to use in the land of the free.