Crypto Debit Cards: 5 Things to Know

Key takeaways about crypto debit cards

• A crypto debit card is a payment card from a crypto firm that lets you spend your cryptocurrency on everyday expenses.

• Instead of paying with dollars, you pay with cryptocurrency that’s sold and exchanged into dollars.

• Paying with a crypto debit card is a taxable event.

If you find yourself wishing more retailers accepted cryptocurrency so you could pay with it directly, a crypto debit card might be what you want. And you wouldn't be alone.

While cryptocurrency and crypto banking are still relatively new, Visa reported that 2.5 billion dollars were spent on crypto-linked Visa cards in the first quarter of 2022. Here’s what you need to know about using a crypto debit card.

A crypto debit card is a payment card provided by a crypto firm such as BitPay (which has a waitlist as of this writing), Crypto.com and Coinbase. Generally, you fund the card with your digital assets before spending, unlike a crypto credit card. Then you can tap, swipe or insert a crypto debit card as you would with a traditional debit or credit card anywhere the card issuer (Visa or Mastercard, for example) is accepted. The difference is that instead of paying with dollars, you're paying with cryptocurrency that's sold and exchanged into dollars.

Crypto debit cards vary, much like traditional debit cards, so the right one for you depends on what you're seeking.

For example, if you prefer to limit your crypto spending, you might choose to use a prepaid crypto debit card that you load with a specified amount of your coins.

Some crypto debit cards also offer rewards such as cash back (sometimes in cryptocurrency), points or other benefits. Look for a crypto debit card that offers rewards you can use.

Just remember, thousands of cryptocurrencies exist, but debit cards work with only a few types. So make sure that the kind of crypto you own or want to earn is compatible with the debit card you're considering.

» Interested in crypto rewards? Read our list of 7 credit cards with crypto rewards

You can get a crypto debit card from the cryptocurrency exchange platform you use, if it offers them, or from a crypto payment service provider. You'll need to order or apply for the card, and you may have to meet some requirements, such as having your identification verified.

» Learn about another crypto offering: What is a crypto interest account?

Cryptocurrency-linked debit cards are subject to the same security issues as traditional debit cards and credit cards. Keep your card and its details safe and as private as possible, just as you would with any other payment card.

» MORE: Find out how debit card security compares with credit card security

When you pay with your crypto debit card, that's a taxable event: When you use your card, you're selling some cryptocurrency and exchanging it for dollars, and you might be selling at a higher or lower price than you bought the digital currency for, meaning that you've created a capital gain or loss.

Some card issuers will automatically generate the 1099s you'll need for tax purposes, but they'll only report your total income from selling cryptocurrency. They won't keep track of individual transactions for you. You'll have to do that yourself to be able to file your taxes properly. (Read more about cryptocurrency and taxes.)

Some crypto-linked debit cards charge fees. In addition to the usual fees you'd find with a traditional debit card, such as ATM and monthly fees, there could be crypto-related fees like an exchange fee for converting from cryptocurrency to dollars.

Once you're set up to spend your cryptocurrency with a debit card, you can use it to buy your next couch or your next cappuccino. Whether you choose to use it and for what is up to you.