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Coinbase Card
- darkengine 6y agoI was under the impression that spending your crypto required you to file and pay capital gains tax. If this is true, won't you have to have a line item for every single purchase you made with this card for the whole year on your schedule D?
- bobyfyfy 6y agoIs that a problem?
- eachro 6y agoIt sounds like a big hassle for you or your accountant.
- apta 6y agoYes. They're hampering the adoption of cryptocurrencies.
- BitwiseFool 6y agoIt's one of those things that gets complicated pretty quickly. Essentially, for every transaction you make you have to determine if you made a profit or a loss with your crypto. The purchase date of the crypto you're converting into USD matters because you need that for short-term vs long-term capital gains. This problem also gets worse if you buy crypto at regular intervals, like I often do, because now you have different gain/loss potentials in the same transaction. Sure, a program can calculate this for you, but it does make filing more complicated. You'll probably have a very long list of items on your 1099.
- seibelj 6y agoLook at the crypto trader's tax return and its 99 pages of forms and 999 pages of trade history. The government demands it!
- icedchai 6y agoIt's easier to forget about it and wait for them to fine you. Unless you're buying lambos, it probably won't happen.
- dmitrygr 6y agoFor anyone in the USA, do not take this advice. IRS is relentless and they go for the balls to make examples of people. Not a clever strategy.
- true_religion 6y agoI day traded for a while, and got an IRS fine. If you simply accept they are right, then pay nothing will happen. Their fines aren’t extra ordinary, and they are very much willing to help you come into compliance. For example, if you do have software that can output all your crypto trades, they will accept that in an audit, and likely only fine you for what you got wrong and not merely not following procedure.
- dmitrygr 6y agoBut if they find posts like this, they won't be as kind. They care a lot about intent. And intent to flaunt rules is quite different than accidental noncompliance.
- jpmoral 6y agoI think you meant 'flout'.
- true_religion 6y agoI think they are lenient if you try to comply, but fail because of the complexity of the rules. Even if you make a post that essentially says "I won't try harder, because the rules are difficult to understand" isn't Mal intent; but an admission that your actions weren't accidental.
- nostrademons 6y ago
- deleted 6y ago[deleted]
- ericmay 6y agoIt would be a transfer wouldn't it? I'd be transferring from my wallet to yours. Would that generally be taxed? I was under the impression that for capital gains taxes it's more so buying, holding, then selling for a profit. Could be mistaken here though.
- javert 6y agoYou have to pay capital gains on bitcoin if you spend it, even if you don't convert it to fiat first. e.g. buy $10 of coins, use same coins to buy a meal later, if the value of the meal is $20 (whether denominated in fiat or the equivalent bitcoin), you have a $10 capital gain.
- BitwiseFool 6y agoThe taxable event occurs because the IRS sees crypto as property rather than a currency. Let's say you buy $100 worth of Bitcoin in the past. Now the value of your coins is $120. If you decide to send $5 worth of bitcoin as payment for something, they consider that a taxable event. You sold X amount of bitcoin, which appreciated 20% value from when you bought it. That X amount was worth $4, now it is worth $5, so you would owe a tiny amount in capital gains tax on $1 you gained. Edit: This exact same scenario happens for Foreign Exchange, but the government excludes most transactions under a certain amount because it's too complicated for travelers. Also, the rate of USD to EURO doesn't fluctuate as wildly as crypto can, so the gains are minimal anyways.
- ignoramous 6y agoDollar-tethered cryptos are then a better deal for a "crypto card", I guess?
- hansvm 6y agoThey'd potentially reduce the tax burden but still require a ton of paperwork.
- dmurray 6y ago> The taxable event occurs because the IRS sees crypto as property rather than a currency. The IRS doesn't make the tax law. How cryptocurrency transactions get taxed is a matter for legislatures and the courts. Obviously, not everyone has the resources to fight the IRS, and your life will go much easier if your interpretation of the tax code matches that of the IRS. But the way you explain it here puts the cart before the horse.
- cbhl 6y agoReporting a few thousand small capital gains transactions on a US Tax Return is feasible. If you exceed the import transaction limits in, say, TurboTax, you can enter and e-file the summary of your transactions, and print out and snail mail the 50 pages of the statement itself. (I've done this before with Betterment, when a bunch of $10 deposits each turned into like 7-8 small lots that were a few dollars each.)
- MithrilTuxedo 6y agoI've done it before. I asked if I could pay with BTC and my bank passed it up until they got word back from Fanny Mae that it was okay so long as you can demonstrate X years of ownership. I think they made a public announcement about it. It was shortly after BTC hit its peak a couple years ago. Coinbase let me export something that satisfied the bank and government that I wasn't money laundering (I'd bought the BTC many years before for less than $10k with money for a bank account I still owned, so I could show the transactions there too). For my taxes, Coinbase has a tool for exporting that calculates that sort of thing. You just select the time range and it gives you all the transactions and how much they appreciated from when you last bought that much.
- tylerhou 6y agoHow does it handle cost basis? Does it let you select individual lots to be sold per transaction?
- qes 6y agoIt seems like most people go with a simple FIFO or LIFO strategy, and crypto transaction tools support usually one or the other or both. Tracking cost basis for specific coins is considerably less common and I'm not sure what tools off hand even support that - none of the major exchanges that I'm aware of.
- xur17 6y agoHuh. I wonder how they handle proof of ownership with self custody.
- kylebenzle 6y agoOf course top comment in HN is essentially anti-crypto. More and more I think this site is run by COINTELPRO. But, for until this comment get removed. Yes, if you own property, then sell it for more than you paid for it, you owe capital gains. It is not a problem or confusing.
- andrewfong 6y agoMaybe Coinbase sets things up in such a way that the cap gains event is triggered only when the balance is paid off? E.g. imagine I incur $10 USD on the card. From Coinbase's perspective, I just owe them $10 USD + maybe interest at the end of some fixed time period. I could pay them in USD or I could pay them in crypto. Since it's not mandated I pay in crypto, you can't really say I've "spent" my crypto until I use it to pay off my balance. In which case you only end up with 12 taxable events per year. I'm sure there's some arbitrage opportunity I'm not accounting for, but it seems like this might work?
- dumbfounder 6y agoIt's a debit card, so there is no balance to pay off.
- jkhdigital 6y agoThat sounds more like a credit card secured by your crypto assets... which might be the next product from Coinbase
- chanfest22 6y agoCo-Founder of CoinTracker (https://www.cointracker.io https://www.cointracker.io) (YC W18) here. You're exactly right. We built software to specifically automate this crypto tracking and tax compliance process. We've partnered with Coinbase and TurboTax to specifically solve this pain point. https://help.coinbase.com/en/coinbase/taxes-reports-and-financial-services/taxes/using-turbotax-or-cointracker-to-report-on-cryptocurrency https://help.coinbase.com/en/coinbase/taxes-reports-and-fina...
- notyourwork 6y ago> Partnered with TurboTax Makes me sad that they are further entrenching their tentacles in our tax system which further discourages the government from simplifying this process.
- judge2020 6y agoSame goes for the Robinhood integration, sadly.
- fourstar 6y agoUpset at a corporation who fixes inefficiencies in the free market? What? How does what TurboTax do prevent the government from changing anything?
- rwiggum 6y agoThis is how: https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free https://www.propublica.org/article/inside-turbotax-20-year-f...
- fourstar 6y ago> But the success of TurboTax rests on a shaky foundation, one that could collapse overnight if the U.S. government did what most wealthy countries did long ago and made tax filing simple and free for most citizens. If the system is vulnerable to exploitation, that’s not the fault of Intuit. They’re fixing inefficiencies in the market, and adding upsells (common for many companies in tech), is part of their business model. I don’t get the hate of TurboTax if you’ve actually used it, since it’s incredibly simple and saves time and money (from my experience). Don’t hate the player.
- Klonoar 6y agoI did this with the Shift Card way back, which was the original card for Coinbase spending. It was a massive pain in the ass to explain the transaction history. I wouldn't be surprised if Coinbase has improved upon that experience, but to what degree I'd be curious about. I don't particularly understand why everyone's happy to gloss over tax implications being undiscussed on things like this. Whether or not it's right (I don't believe it is), the fact remains that the average new user is not aware of this quirk of Crypto.
- wmf 6y agoIf you understand all the gotchas you become a nocoiner and they don't want that.
- awinder 6y agoI wonder how smart this system is going to be — it’d be wise to have the rewards & purchasing happen on a stablecoin to avoid this. Then make users have to choose to then stash it somewhere they won’t draw from and trigger these events, if they want to “invest in a crypto”. It’d also be wise because coinbase can then charge their fees as they so do. This is also fundamentally not so different from e.g. having spend vehicles with your brokerage. But the addressable market may be higher / different for coinbase which could cause a lot of headaches, like this one, if not carefully managed.
- xur17 6y agoMaybe this will encourage lawmakers to finally add a de-minimis exemption.
- m3kw9 6y agoThe transaction in the back end probably is just an internal transfer. You do a one off transaction say 1000 and you spend from that. So you only did a single asset sale
- smoovb 6y agoBetter than a sale, would be a one off borrow, and pay back your loan each month. No tax event.
- vmception 6y agoYou can stay long your crypto by depositing it into some DeFi platform to borrow against it. Borrow a stablecoin like DAI and deposit that on Coinbase and you can spend it on the debit card and earn rewards. Don't forget to buy insurance on your DeFi use to mitigate a wider variety of risks.
- 29083011397778 6y agoI find it beyond fascinating that it's a Visa debit card. I'm sure they went with Visa to ensure it was accepted by default at most (nearly all?) merchants, but the legal trade-offs and concessions Coinbase had to make to appease Visa will be interesting to read through.
- BitwiseFool 6y agoMy guess is that when a transaction is made Coinbase sells the appropriate amount of your crypto at market-rate plus a small fee and then the cash goes through Visa's payment network. So on Visa's end this is probably just a normal debit card and they don't have to directly handle any crypto.
- wmf 6y agoCoinbase made all those concessions years ago; they're basically as "evil" as a bank.
- ska 6y agoWhat legal trade-offs? I imagine Visa is willing to offer similar terms to what they give everyone else. As long as they make their per transaction profit, what else would they be concerned about (other than guaranteeing Coinbase pays them, but that's just contracts too).
- arisAlexis 6y agoThe fees are very high. 2.49% for crypto liquidation where fiat money has 0% if it's the same currency and much lower if its another.
- sguo35 6y agoThat partially explains how they can offer 4% rewards on a debit card.
- BitwiseFool 6y agoThat, and the 4% reward is in Stellar Lumens, not cashback.
- vmception 6y agocool. thats pretty interesting. I should read more about this. I wonder how long they'll be able to do it during a sideways or bear market.
- pingec 6y agoThat is so high. Are there any similar cards with lower fees?
- agiamas 6y agoWirex
- expired-link 6y ago"Hold", it will be soon available (https://utrust.com/hold/ https://utrust.com/hold/). It's powered by Utrust which doesn't add any fee (only the seller gets a fee: 1% of the selling price). They just actually just introduced what they called reverse stacking : If you stack 1000 utk, you can get the 1% fee payed by the seller. I am not sure about how much fees Visa will add from their part of the currency transfer. But I guess these fees will stay the same no matter which project you use as long as Visa is part of the payment solution.
- spyder 6y agoBinance also offers a similar card: https://www.binance.com/en/cards https://www.binance.com/en/cards Their related FAQ articles: https://www.binance.com/en/support/faq/c-5?navId=53#/5/53 https://www.binance.com/en/support/faq/c-5?navId=53#/5/53
- sparkie 6y agoSpend fiat, denominated in crypto.
- ShaneMcGowan 6y agoDoes this not completely defeat the purpose of cryptocurrency? At this stage, why not just use regular old fiat money?
- azinman2 6y agoBecause self-supervised automated AI hyper edge blockchain cloud IoT computing goes from 0 to 1.
- kylebenzle 6y agoHN people are the dumbest people on Earth sometimes.
- chrisco255 6y agoBecause I can hold my long position on crypto and mint collateralized stable coins to spend.
- xur17 6y agoI think it's useful to think of this as a proxy to the fiat world. You can continue to use and hold your crypto where possible (hoping more places accept it directly over time), but have a way to spend it at existing locations that only accept credit cards. I think the real death blow here is the 2.49% fee that Coinbase charges on every transaction for liquidating the crypto (I'm struggling to find this on their website, but I see someone posted it in another thread).
- drummer 6y agoYup people using this don't understand they are doing exactly the opposite of why Satoshi created Bitcoin. The whole idea was that users would transact directly with eachother avoiding middle men, especially banks and other criminals and robbers such as the governments and tax collectors.
- nukemandan 6y agoMeh. The point of crypto is to bypass the present rails of commerce. Not to add yet another layer and middleman / middleware to the mix that adds fees and overhead.
- jdhn 6y agoI hate to say it, but this is what the future of crypto is going to look like. The signs were there ever since Neo & Bee spun up back in the mid 2010's (and then promptly blew up).
- raziel2701 6y agoYeah, I think this is why some more serious players are joining the space. They are going to further centralize things and make it more palatable for regular people to join. Even the Fed has started talking about digital currencies.
- SpicyLemonZest 6y agoOriginally, maybe, but even the most dedicated Bitcoin purists I've seen have long since agreed that we're going to need layers such as the Lightning Network on top. Some middleware serves a legitimately valuable purpose that can't easily be integrated end-to-end.
- chrisco255 6y agoEmbrace. Extend. Extinguish. It's my theory that crypto is following the same arc that Microsoft used to dominate personal computers and office software. Paypal recently announced crypto integration. Other payment processors will follow. Eventually merchants will want to save 3% and accept crypto directly. They might even pass the savings to the user.
- ionwake 6y agoWhere / how is the Extinguish phase?
- 6y ago
- stblack 6y agoThis is Gresham's law, in reverse. Gresham's law: "bad money drives out good". Meaning when two forms of commodity money are in circulation, the more valuable commodity will gradually disappear from circulation. This appears to be another step forward for cryptocurrencies, but consider paying with shitcoin and fiat before you liquidate the good stuff. It's never been wise, so far, to pay in Bitcoin for pizza.
- chrisco255 6y agoWhy is this not true of the US dollar? In many countries with awful inflation rates, the government has to enact strict fines to prevent the dollar from taking the local currency's place.
- tgb 6y agoI think this is key to Gresham's law: government regulation of the value of the bad currency is what makes the bad currency be used. Without that legal protection, the bad money wouldn't be accepted. If it's required to be accepted, then you'd be a fool to not spend the bad money whenever you have it. So it seems that your observations are just an example of Gresham's Law.
- stblack 6y agoGresham's law: https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law In many countries, you can exchange US$ for local currency, but not the other way around. That's by government decree. Yet the dollar is prized even though the decree says otherwise. In any case, there's much more than government decree factoring in what's bad money.
- tgb 6y agoWhat's the counter example here supposed to be? Gresham's law says that people want to get rid of (spend) their bad money and get paid by the good money (US dollars, here). But government regulations mean they have to take the bad money and so therefore only the bad money gets used. You're describing the same situation where bad money gets used even though everyone would prefer to take USD.
- Aaronstotle 6y agoWho is this even for? The crypto maximalists won't spend crypto on a small purchase, and everyone else will use a credit card. If someone at Coinbase is reading this, I'd sincerely like to know the rationale behind this product launch
- parliament32 6y agoProbably to convince people to keep their crypto-I-want-to-spend-as-fiat in coinbase instead of PayPal.
- Aaronstotle 6y agoI feel like that decision comes down to if people have a PayPal account or Coinbase account.
- closeparen 6y agoI would expect most people to have both.
- kylebenzle 6y ago"Crypto maximalists" are idiots, PERIOD. Bitcoin Cash and Ethereum are where the real users are now and both groups enjoy using crypto as it was designed and described in the White Paper.
- mxskelly 6y agoSomething about the way you wrote this makes "the White Paper" sound like some kind of religious document and I think that sums up the attitude of most crypto evangelists
- fab1an 6y agoI assume this is marketing play to get more people into crypto by at least somehow creating the appearance of it being an actual currency already. I doubt many people will actually use it, but it may convince more crypto-curious folks to actually join the "movement"
- INTPenis 6y agoCrypto currencies are essentially dead to me because recently, during 2020, banks and card issuers like Mastercard here in Sweden (Entercard) have started banning all transactions to known crypto exchanges like Coinbase. So imo that's a death blow and no one is reporting about it.
- WanderPanda 6y agoTo me thats even more of a sign that we desperately need money that can be freely used
- jdu9 6y agoExchanges like https://localbitcoins.com/ https://localbitcoins.com/ or https://bisq.network/ https://bisq.network/ should work for you. Personally, I have only ever used services like Coinbase (BitPanda, anycoindirect), but I guess person-to-person deals aren't bad either. You might even get better prices.
- tofuahdude 6y agoThe more major economies have increasingly been supportive of crypto; Sweden on its own cannot death blow crypto as a whole when its legal in most other large economies.
- INTPenis 6y agoI meant to me it's practically dead, unless I can find alternative methods. One user already suggested a few promising ones but all it takes is for whatever organisation is blocking exchanges to find them and block them. It's basically done on an account by account basis, at the banks and the card issuers. Which means any IBAN known to be associated with a crypto exchange, or any account you attempt payment to with your card. It's cat and mouse game. And I'm afraid they're setting a precedence for other European countries. Of course their reasons for this are to chase small time tax evaders while big time corporations like Facebook are being given massive tax breaks because some moron thought a datacenter would bring 30000 jobs.
- vmception 6y ago
- nooyurrsdey 6y agoGood business move for them. I always chuckle to myself how these things come full circle - this is now back to the old "banking with a credit card" model. The core value of crypto and it's anonymity are now gone, and it's regulated.
- john_alan 6y agoBitcoin is as traceable as a SWIFT payment. Monero is about the truest to the original cypher punk dream as we have now.
- brian_cloutier 6y agoIt depends on your trust model. If you believe in fancy cryptography then shielded zcash is even better than monero. Monero keeps increasing the size of the anonymity set as it becomes more clear to them that modern deanonymization techniques are quite good: https://mudit.blog/mixers-are-insufficient/ https://mudit.blog/mixers-are-insufficient/ Though, of course, neither are perfect, we're going to keep finding attacks on these things for a while: https://crypto.stanford.edu/timings/ https://crypto.stanford.edu/timings/
- blueprint 6y agoMonero is not a mixer, and actually calculations show a small ring size is usually very sufficient. Read more.
- brian_cloutier 6y agoIf you give me a link I'm happy to "read more" but you're going to have to give me a link or make an argument, I have no interest in going searching for something so likely to be wrong. Here is an active deanonymization attack [1]: > We show how an attacker can take advantage of Monero’s Bulletproof protocol, which reduces transaction fees, to flood the network with his own transactions and, consequently, remove mixins from transaction inputs. Assuming an attack timeframe of 12 months, our findings show that an attacker can trace up to 47.63% of the transaction inputs at a cost of just 1,746.53 USD. Sounds pretty bad to me. Here's another attack [2]: > First, about 62% of transaction inputs with one or more mixins are vulnerable to “chain-reaction” analysis — that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such away that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the “newest” input. We estimate that this heuristic can be used to guess the real input with 80 %accuracy over all transactions with 1 or more mixins. I don't care what "calculations" say, if so many transactions can be deanonymized then those calculations were calculating the wrong thing. [1] https://eprint.iacr.org/2019/455 https://eprint.iacr.org/2019/455 [2] https://arxiv.org/pdf/1704.04299/ https://arxiv.org/pdf/1704.04299/
- songshuu 6y agoIt's neat. Uphold's been doing the same thing for a couple years at this point as well.
- x87678r 6y agoWhy would anyone want to actually spend BTC? The only reason it exists is because it only goes up in value.
- deleted 6y ago[deleted]
- RandomBacon 6y agoIt only has value because people use it.
- tootahe45 6y agoThe cybercrims don't actually believe this, and need off-ramps to get out of crypto. They are willing to pay high fees for this, and often hold confiscatable stablecoins over btc.
- x87678r 6y agoAren't BTC transactions now like $3? Do you have to pay that too every time you use the card? Edit OK it looks like $6 if you want done within a few minutes, presumably the card can do more slowly so is just a few cents. https://privacypros.io/tools/bitcoin-fee-estimator/ https://privacypros.io/tools/bitcoin-fee-estimator/
- wmf 6y agoCoinbase is off-chain so you don't pay transaction fees. (You pay much higher Coinbase fees instead.)
- zkid18 6y ago> Coinbase Card is available for customers in Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Estonia, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the UK. We’re working on expanding the offer to additional markets. Seems only relevant to EU and UK
- smoovb 6y agoI wondered if they considered the Nexo model where the card is a credit card and each transaction is a loan against your crypto assets. Paying pack the money your borrow each month should trigger no tax events given your never selling your crypto. It also seems like a lending model most like todays credit cards.
- sabujp 6y agoThis is great news for cryptos. Now trade, make money, and spend directly.
- jwmoz 6y agoI have a UK card that expires in 2022 and they shut it down for no apparent reason.
- timdaub 6y agoWow, terrible user experience. I'm an existing customer but when coinbase asked me to log in with my device, clicking the link on the email didn't work. So I had to manually log into with my browser. Additionally, it wanted to send my card to a 5 year old address but there was no way of changing that info within the app. Lastl,, I was like: Wohh, finally I can get the card. When the app said that I need at least 5€ in crypto before proceeding. I guess that's no card for me...
- Zanfa 6y agoI would have loved to try this out, but it’s impossible to get past email verification on iOS. The verification link opens in Safari, instead of the webview inside the app, so it triggers a “not the same device” error.