The Cash App card has many features such as discounts while shopping, direct deposits and instant transfers, but is there any way to spend that bit of profit your Bitcoin investment made?
The answer is: “sort of.” Cash App puts American users closer to spending their Bitcoin at stores than any other onboarding platform or exchange, but there is still a couple buttons that you will have to press.
How to sell your Bitcoin. Don’t worry, it’s quick.
Unlike withdrawing your Bitcoin, there are no extra security steps to sell it. As long as you are allowed to purchase Bitcoin, you will also be able to sell it.
Navigate to the Bitcon/Stocks page, on the bottom right side of your app.
Press sell, then select how much you would like to get rid of.
Confirm the transaction. The fee should be around 2%
Funds should instantly be in your account, now you can spend it.
Cash App is the fastest way to spend Bitcoin in the U.S.
In Europe, Coinbase has a debit card that allows you to choose between a variety of coins and spend them. Unfortunately, this is not allowed yet in the United States, and no other crypto exchange offers allows users to manage cash as closely to Bitcoin as Cash App does. Since Cash App allows direct deposits, one could receive payments from their employer through the app, immediately sell it for Bitcoin and be cash free until they need to make a purchase.
The only downside to this is that U.S. citizens pay “capital gains” taxes when selling assets for a profit. This can cost you 20% of the appreciated value depending on how much it is and what state you are in. Because of this, we recommend that you sell Bitcoin as infrequently as possible. At the end of the day, you will have to report all sales on taxes. Check out how to report Cash App Bitcoin transactions to the IRS here.
Cash App is one of the most accessible crypto on-ramps for American citizens, and many others throughout the world. Right now, as long as you are willing to give Cash App your personal information, they will allow you to purchase a significant amount of Bitcoin with reasonable fees. This has Ethereum enthusiasts wondering when they’ll be able to buy ETH on Cash App.
Cash App still is figuring out Bitcoin’s business model
Unfortunately, Square has not said a word about adding support to Ethereum. In fact, they seem to be having trouble finding a profitable business model for Bitcoin. In Square’s quarter 3 earnings reports, it was clear that Bitcoin wasn’t making them much money. Square spent $146 million in operation costs for providing Bitcoin, and only brought in a revenue of $148 million, leaving total profits at $2 million. This was measly in comparison to their total $500 million in net profit.
Statement from Square‘s Q3 2019 shareholder letter:
In the third quarter of 2019, Cash App revenue comprised $159 million in subscription and services-based and transaction-based revenue, and $148 million in bitcoin revenue. During the quarter, bitcoin generated $2 million on gross profit.
Advocates of purchasing Bitcoin through a Cash App account liked to note that fees are significantly lower than on Coinbase for small purchases. Initially, Cash App made money through a price spread, which would cost tenths of a percentage on a $10 purchase in comparison to Coinbase’s 10%. After their 2019 Q3 earnings report was released, they switched over to a fee base model, similar to Coinbase’s but still cheaper for small purchases.
I say all of this to clarify that because they are still figuring out how to make decent money off of Bitcoin, they are unlikely ready to provide access to a less liquid token like Ethereum.
Would Cash App offering Ethereum pump the market?
When Bitcoin became available to purchase on Cash App, on of the most widespread financial apps in the world, what actually happened to the price? Crypto enthusiasts are always excited when their coin is listed on huge onboarding platforms, like Coinbase or Binance. One of the reasons Ethereum holders are even wondering if Cash App will list their token is because, let’s be honest, it has the potential to increase the value of ETH.
Bitcoin has been available for purchase on Cash App, in the U.S. since August 2018. During this time, price was ranging between $6.5k and $7k. A few months later, Bitcoin capitulated to its local bottom at around $3k. Basically, after Cash App allowed U.S. Bitcoin purchases, price still decreased by half and never returned to that $7k range until around 10 months later.
This is not to say that Ethereum has no chance of seeing positive price action from a Cash App listing though. Historically, Coinbase listings have had very positive effects on the price of some tokens. LINK, or Chainlink, for instance was listed in June 2019 and there were rumors of a listing dating back to April. During this time, the price of LINK increased to about 9x at its peak and has yet to drop back down to pre-April prices. Still, this type of price action has not been consistent with every coin listed on Coinbase.
If people could predict future values of assets, money would be free. There’s no real way to predict what would happen to the value of Ethereum with a Cash App listing, but it would undoubtedly allow more people to purchase it if they wanted to.
Has Cash App said anything about letting users buy Ethereum?
Jack Dorsey, CEO of Square (who owns Cash App), appears to be what one might call a Bitcoin maximalist. Here are some tweets where he has been transparent about his opinions of other crypto assets:
All of these tweets were written around a year ago, and he hasn’t made any comments on Ethereum since. There has been natural growth in Ethereum’s decentralized finance space, which has created tangible value. It’s really up to Ethereum’s community to convince people that their product is worth-while. Maybe as new Ethereum tech releases, Dorsey will become a believer.
On November 6th, Square released a Q3 letter to shareholders, giving some insight as to how their Bitcoin offerings are going. According to Square, Cash App’s “First-time bitcoin buyers have approximately doubled.”
Square is adding more trading features during Bitcoin’s seemingly bearish trend. Today, they tweeted that Cash App users can buy stocks with as little as $1.
An exchange that has comparable features to Cash App’s stock trading is Robinhood, a newbie friendly mobile app. The difference is, Robinhood requires users to purchase whole shares of stocks, which can make investing hard for someone with low income.
Having the ability to buy any amount of a share means that a user can dollar cost average $50 per paycheck rather than buying one $243 Apple share every two and a half months.
This gives people who are looking to take money out of Bitcoin as the price drops an incentive to keep the money on the platform. Instead of cashing out, they’ll be able to make a new investment decision, and fall further down the trading rabbit hole.
Square says that the feature will be rolling out very soon. Judging by the promotional video, stock trading options will be in the same location as where bitcoin is purchased. Users will need to give information such as their drivers license, social security number, source of income and the reason for investing in order to trade stocks.
If you’ve purchased, sold or traded Bitcoin on Cash App, you will need to know where to find the necessary forms to help report for taxes.
A draft of an IRS tax form was released in October 2019 that asks whether or not you’ve dabbled in the virtual currency world.
“At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?
Cash App form 1099-B
Cash App will be one of the easier exchanges to file taxes in since there is only one crypto and no advanced trading interface.
The company is required by law to file a copy of your 1099-B form to the IRS every year. Buying Bitcoin is not a taxable event, but net profits from selling it is.
By going to your account page on Cash App’s website, you should be able to receive your 1099-B by February 15th.
According to Cash App, “The proceeds box amount on the Form 1099-B shows the net cash proceeds from your Bitcoin sales.”
If you sent Bitcoin to an exchange
If you sent your Bitcoin to Coinbase Pro for trading purposes, you shouldn’t need to report anything as long as you had under 200 transactions.
In most states, those 200 transactions have to have earned over $20,000 in order to require payment. For the few states that have lower thresholds, see the previous link.
Bitcoin sent to an exchange like BitMex or Deribit that doesn’t have KYC requirements will likely not be recognized like Coinbase Pro but keep records just incase.
Transferring between crypto wallets is non-taxable, but again, net profits are. This means that the amount of Bitcoin received on a regulated exchange minus the amount that you’ve purchased with fiat can be subject to taxation.
The barrier to entry in crypto trading is much lower than in traditional markets, but it doesn’t mean that the IRS doesn’t take it as seriously. Before you make big money, it’s important to know the big facts on how you will be taxed.
