Will the IRS Be Watching Over Testing of the New Coinbase Card in the United Kingdom
- Coinbase’s crypto debit card provider recently shut down, causing the company to move to PaySafe.
- The IRS will seek out transactions that can have taxes imposed on the US-based Coinbase card.
Coinbase is one of the many platforms in the cryptocurrency space that continues to innovate for the sake of supporting their customers.
With retail spending having such a massive impact on the industry, the company launched a crypto debit card with Shift Card, only to find themselves in a difficult predicament when the provider shut down this year. Rather than just discontinuing the offer, Coinbase found a solution in PaySafe.
The Coinbase Card was first brought to the UK market, allowing the users to convert their crypto assets to GBP during a POS purchase or through an ATM. Users need to download the corresponding card app to access information about their card, which also links with their crypto account.
Designed for iOS and Android, the users can even swap between wallets and use any of the assets that the Coinbase platform offers. Specifically, users are encouraged to shop with ETH and BTC. The app also provides the user with receipts for the payments they make in stores, recording the details on a transaction summary. Basically, this car bridges the gap between traditional spending and crypto spending.
For users to take advantage of the card’s benefits in the UK, there is a transaction fee with every purchase, which is fairly common with Visa transactions on a prepaid card. The issuance of the card alone is $6.48, and every purchase incurs a 2.49% charge, based on the amount spent.
Dividing up this charge, 1% of the charge is for the transaction, while 1.49% is for the conversion from cryptocurrency to fiat currency. Daily spending limits imposed restrict the user to no more than $13,092 in charges each day, and the reversal of a transaction comes with a $26.19 charge as well.
Even though much of the community is happy about this development, skeptics remain as hard to please as they’ve ever been. The charges, as they see it, are ways that Coinbase is trying to make even more profit from their customers, despite the fact that other credit card companies charge similar fees. These opponents are even encouraging crypto users to stay away from the card all together, only using the internet for their spending.
Adding to the criticism is Lex Sokolin, who used to work with Autonomous Research. He said:
“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.”
The CEO of Coinbase UK, Zeeshan Feroz, commented on these statements, saying that the goal of the platform is still “to create a more open financial system.” Their mission has not changed during the duration of the company’s lifetime, exhibited further by the constant additions of newly listed tokens. He added that the ability to use this crypto card makes it possible for users to make payments with the chip or a PIN, and that ATM withdrawals are made simple.
The use of the Coinbase card in the United States will be a little pricier, considering the capital tax gains that the government stands to make.
Every single transaction is examined to see if taxes should apply, which is why the Internal Revenue Service (IRS) will be overseeing the card domestically. Taxes will ultimately be implemented for the conversions from cryptocurrency, and will still be imposed on retail purchases, just as they are with credit cards.
Even transactions involving airdrops and purchasing tokens are on the chopping block for taxation.
At this point, if the IRS imposes all of the taxes planned, it is likely that the card will prove to be too expensive for American blood. So much for the land of the free.