A crypto credit card allows users to extend a line of credit, based on the value of the cryptocurrency they have stored in an account with the issuer. Then at the end of the month, the card owner will either pay back this line of credit or allow the card issuer to take its equivalent value in cryptocurrency from your account.
These cards, such as the SoFi Credit Card or BlockFi Rewards Visa, allow customers to do all the things that regular cards do, like make purchases with either a physical or virtual card and even make cash withdrawals at an ATM.
What’s Special About Crypto Credit Cards?
What makes these cards unique is that this form of crypto credit line does offer some interesting benefits, especially regarding taxation.
Crypto taxation can often be complicated and can vary between regions but, generally speaking, selling crypto is considered to be a taxable action. This means that certain crypto card types, like crypto debit cards, engage in a taxable event every time they make a purchase.
With crypto credit cards, you’re spending a fiat equivalent to the value of your stored crypto, and therefore you are not actually selling or spending any crypto, thus avoiding any possible tax headaches in the future.