Pay with Stablecoins

Spending Stablecoins: What You Need to Know

How it works

Unlike traditional credit cards that use a line of credit, stablecoin cards are typically prepaid debit cards. You top up your card wallet with assets like USDC (USD Coin) or USDT (Tether). When you swipe your card for a $5.00 coffee, the provider instantly sells 5 USDC from your account and sends the fiat currency to the merchant.

Direct Spending vs. Crypto Rewards Cards

It is important to distinguish between the two main types of crypto cards available today:

• Stablecoin Spending Cards (Debit): These allow you to hold crypto until the moment of purchase. The main benefit is liquidity—you don't need to sell your crypto and withdraw to a bank to spend it. (e.g., Coinbase Card, Crypto.com Visa).
• Crypto Rewards Cards (Credit): These are standard credit cards where you spend fiat currency (and pay a monthly bill), but the cashback rewards are paid out in Bitcoin or other cryptocurrencies. These do not usually allow you to spend your crypto holdings directly. (e.g., Gemini Credit Card, Upgrade).

Tax Implications

In many jurisdictions (like the US), spending cryptocurrency is considered a disposal of assets. However, because stablecoins are pegged 1:1 to the dollar, the capital gain or loss is usually zero (or negligible due to tiny price fluctuations). This makes spending USDC/USDT much simpler for tax purposes than spending Bitcoin or Ethereum, which triggers capital gains taxes on every coffee you buy.

Fees to Watch For

While spending stablecoins is convenient, be aware of these common fees:

• Liquidation Fee: Some cards charge a small spread (0.5% - 2%) when converting crypto to fiat.
• Foreign Transaction Fee: If you travel, look for cards with 0% FX fees.
• ATM Fees: Most crypto cards allow cash withdrawals but may have monthly limits before fees apply.