BitPay, another firm, offers a prepaid Mastercard debit card that customers can use to spend their digital currency. Coinbase, for one, has a special debit card that lets customers spend any Coinbase assets they own and earn cryptocurrency rewards, but there's currently a waitlist for new customers. If you want to spend your balance easily, you'll need to open an account with a firm that offers cryptocurrency debit cards and uses the kind of digital currency you own.
Several apps have made it easier to purchase and sell cryptocurrency, even in small amounts, and store it in a digital wallet. To start using these kinds of banking services, you must first purchase cryptocurrency, such as bitcoin, litecoin, ether or any other currency that you would like to invest in. Securities and Exchange Commission recently announced that it was going to potentially sue Coinbase, one of the most well-known exchange firms, for offering a new lending product, and Coinbase has since canceled the product launch.Ĭonsumers should also know that using a cryptocurrency debit card is considered a taxable, since the cardholder is technically selling cryptocurrency as they make transactions with their debit card. But the value could also go down, making previous purchases a good deal.Īnother barrier to consider is that regulators are still evaluating cryptocurrency fintechs. For example, if the value of your cryptocurrency doubled after you bought a $5 sandwich, that means it effectively cost you $10. Many banks rely on the stable value of currency in order to lend, borrow or earn interest on money, but it's not possible, at this time, to do those things with cryptocurrency in a way that's as stable or safe as with traditional currency.Īnd to spend your digital coin, you have to accept the risk that its value could go up after you spend it, since your transactions are based on the real-world value of your coin as it exists at that moment. It's the same barrier to investing in it: To hold cryptocurrency, you have to accept that ``if your coin falls, you could lose a lot of money,'' says Francisco Alvarez-Evangelista, a research associate at the Aite-Novarica Group, a financial services analysis firm. Perhaps the biggest barrier to lending and spending cryptocurrency is how volatile it is. This means that your digital funds are accepted wherever many regular debit cards are.
Now, financial technology firms are partnering with chartered banks and/or debit card issuers to offer these cards, using their partner's logistical and regulatory framework to automatically sell your cryptocurrency behind the scenes, converting it into dollars and allowing retailers to accept it. They allow you to use your digital coin balance like any other currency to make everyday purchases or withdraw it as cash instead of keeping it as an investment.īefore these debit cards were available, you could spend your cryptocurrency only at retailers that chose to accept it directly or sell it in exchange for dollars. At this time, the main benefit of this kind of banking is cryptocurrency debit cards.