Visa and MasterCard are trying to help users spend and earn bitcoin, but accountants say these crypto debit and credit cards can lead to confusing tax bills.
Visa, which partners with Circle, BlockFi and Coinbase, told CNBC in July that more than $1 billion worth of cryptocurrency was spent by consumers globally on goods and services through their crypto-linked cards in the first six months of the 2021.
But accountants and financial advisers tell CNBC there is a massive catch. Every time you swipe one of these crypto cards, you're logging a "taxable event." "Some people are like, 'Oh, I'm not selling my crypto, so I don't have to pay capital gains taxes.' But that's completely wrong," said Chandrasekera., meaning that they are taxed in a manner similar to stocks or real property.
"There's no minimum for capital gains. It applies for even a penny of gains or even less than a penny, in the case of a micro transaction," said Neeraj Agrawal of Coin Center, a cryptocurrency policy think tank. Agrawal said a solution in creating a "de minimis exemption" for crypto transactions, similar to what was proposed in the Virtual Currency Fairness Act introduced to the House last year. A de minimis exemption would mean that a set amount, perhaps up to $200, of capital gains for crypto-based transactions would be excluded from the capital gains reporting rule.Some cards, for example, are tied to a user's stablecoin holdings.
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