The United States accounts for nearly a quarter of worldwide trading of Bitcoin. This fact alone should give you an idea of accessibility to cryptocurrency in the US. It’s a hotbed of crypto activity and many of the biggest crypto companies call the USA home. There are currently no federal regulations for cryptocurrency, and each state has its own decision to make regarding its treatment of digital currency, though many have yet to make this decision. Purchase and exchange of cryptocurrencies is totally legal across the country.
While there is no official federal legislation for crypto assets in the US, the bodies at the federal level have offered guidance to states.
At this point it’s not clear which agency is actually in charge of regulating the crypto market but both the SEC (Securities Exchange Commission) and CFTC (Commodity Futures Trading Commission) have claimed ownership at certain points.
Recently the SEC has attempted to crack down on crypto exchanges like Binance and Coinbase by deeming various cryptos as securities. It’s yet to play out in court but it might ultimately make buying certain cryptocurrencies more difficult.
Meanwhile the CFTC would like to regulate cryptocurrencies as commodities, which would make it far easier to buy and sell crypto coins.
In either case, it is completely legal to buy, sell and trade cryptocurrencies, however they are not considered legal tender.
What’s the Best Way to Get Cryptocurrency in the USA?
The best way to buy cryptocurrency in the USA is through a cryptocurrency exchange such as eToro, Coinbase, Kraken, Gemini, Coinmama or Changelly.
There is a plethora of options available, so it is best to look at each of the exchanges’ processes for deposits and withdrawals, fees, transaction speeds and crypto trades to determine which is best for you. Ideally you’ll choose one of the safest crypto exchanges.
Is it Easy to Buy Crypto in the US?
It’s quite easy to buy cryptocurrency in USA. The first step is choosing a hardware or software wallet, and the second is to pick an exchange to buy from. The most difficult step is getting your identity verified through a Know Your Customer (KYC) process. This involves providing your full name, date of birth, and residential address to the exchange. Your identity must then be verified by providing them with a copy of a passport or government issued ID. Some exchanges provide a video call option. Once the exchange has verified your identity it is easy to buy and sell cryptocurrency. You can even use a credit card to buy cryptocurrency in the US, making it even more accessible.
In summary here are the five basic steps for buying crypto in the USA:
- 1. Choose an Exchange
The first step to getting cryptocurrency is deciding where you are going to purchase it. For most people the most convenient (and cost effective) way to acquire crypto is an exchange.
There are a variety of different factors to consider when picking a crypto exchange but we’d argue that security and reputation should always be the most important consideration. In addition here are some other factors to think about: Software or user interface, fees, number of different cryptocurrencies available for purchase.
Here’s a shortlist of the best crypto exchanges.
- 2. Verify identity
Most cryptocurrency exchanges will some form of verification (this is known in the industry as Know Your Customer or KYC). They will likely require some combination of bank account info, driver’s license or passport, proof of residency and current photo. Don’t be dissuaded by this process as the most regulated (and secure) crypto exchanges are required by law to gather that information.
- 3. Purchase Bitcoin
Once you’ve funded your exchange account you should immediately be able to purchase Bitcoin or any other cryptocurrency at whatever the current rate is. Buying crypto on an exchange is generally a very easy process.
- 4. Store Bitcoin
The different methods of storing crypto are hotly debated in the industry. Many prefer to remove their crypto from exchanges to hardware wallets for added security. However, if you’re not technically proficient your crypto might actually be safer on an exchange. Furthermore it’s easier to make numerous transactions from an exchange account. It’s a personal decision in the end.
Learn more in our “Do I Really Need a Hardware Wallet?” article.
- 5. Manage Bitcoin
You’ve finally acquired crypto! What you do from here is up to you. You can simply let it sit and hopefully let it gain value. You can also stake certain cryptocurrencies to earn interest. You can also experiment with DeFi or NFTs. You could send it to friends who want to learn more about the technology. It’s all up to you. It’s your crypto, after all.
Is It Legal to Buy Cryptocurrency in the USA?
It is legal to buy cryptocurrency in the USA. US federal regulators are currently embroiled in a dispute as to how cryptocurrencies should be classified. In the meantime cryptos do not count as registered investments but there are potential tax ramifications any time you buy, sell, or trade bitcoin, mine or stake crypto it might count as a tax event.
Quite often the easiest way to think of crypto in the same vein as gold, silver or stocks.
Can I Buy Bitcoin in the USA?
Yes! You can buy Bitcoin in the USA through an online exchange or a Bitcoin ATM. Online exchanges such as Coinbase make it simple to purchase Bitcoin with a credit card, debit card, bank transfer, or bank wire. There are higher fees when purchasing Bitcoin with a credit card or debit card compared to a bank transfer, something to keep in mind when deciding where and how to purchase your Bitcoin.
But What’s the Best Way to Buy Crypto in USA?
This is up for debate but most people would agree that a centralized exchange is certainly the easiest way to purchase cryptocurrency. After signing up for an exchange you’ll be able to buy and sell crypto from the comfort of your own home. The process is similar to how it works for popular stock broker websites like TD Ameritrade or E-Trade.
The important part, however, is to make sure that you sign up for reputable cryptocurrency exchanges. There have been some examples of shady exchanges going bankrupt and leaving their customers high and dry. Fortunately the reliability of cryptocurrency exchanges has improved immensely over the last few years.
Conversely some people prefer to use peer-to-peer cryptocurrency exchanges where customers in a specified region trade coins to each other directly. These types of centralized exchanges have some downsides, however, as it can be much more difficult to facilitate trades.
Are There Any States Where Cryptocurrency is Banned?
There are no states where cryptocurrency is banned. But it’s more difficult to buy crypto in several states including New York, Rhode Island, Arizona and Hawaii. Texas also has some unique laws regarding crypto.
New York has implemented a policy where any business dealing with cryptocurrency must apply for a BitLicense, which has a $5000 application fee, and has 44 pages of compliance requirements. Since implementation most other crypto trading firms have moved out of NY state. It’s actually still very easy to buy crypto in New York on a licensed exchange like Coinbase or Kraken but you’ll have far fewer options as far as exchanges go.
Rhode Island assesses sales tax on all cryptocurrency transactions and development, meaning that as a business you get taxed for accepting cryptos, but also for developing or researching cryptos. Like NY, most firms have jumped ship.
Arizona has adopted the same policy as Rhode Island, taxing companies doing even just software development and imposing sales tax on any transaction made with cryptocurrencies.
Meanwhile Hawaii doesn’t have any laws against cryptocurrency but it requires all exchanges to have their entire cryptocurrency balance backed up by traditional currency. Therefore most major US-based cryptocurrency exchanges have opted to not offer service to residents of the Aloha state. There are still a handful of other crypto exchanges that service Hawaii — including Gemini and Kraken — but it is very limited.
What’s the Cheapest Way to Buy Cryptocurrency?
The cheapest way to buy Bitcoin in the USA is through an online cryptocurrency exchange. The exchange that is cheapest depends on their fees, whether for depositing, withdrawing, or trading.
Your preferred funding and payment method is a large factor in which exchange is best for you. Quite often credit and debit cards will be among the more expensive ways to purchase cryptocurrency but people still do it because of the convenience. You can also go for lower-fee methods, such as wire transfers, but they take considerably longer.
Finally crypto exchanges also charge withdrawal fees. The fees vary from exchange to exchange but if you’re sending to a personal crypto wallet you’ll always have to pay the network fees associated with the individual cryptocurrency (Bitcoin or Ethereum or other digital assets).
What About Transaction Fees?
It’s worth noting that some crypto users like to go far beyond just purchasing crypto and instead prefer to trade it frequently (ideally for a profit).
Crypto exchange cater to these users with advanced trading features and low fees for high-volume trades (called maker and taker fees) but it’s important to remember that it’s exceptionally difficult to have success in cryptocurrency trading. It’s especially important for high volume traders to find the best crypto exchanges to avoid high trading fees.
Can I Sell My Bitcoin in the USA?
Yes! You can sell Bitcoin (or any other crypto) in the USA through an exchange.
Simply deposit your Bitcoin (assuming it’s stored in your wallet, and not already on the exchange) onto the exchange. Once it is on the exchange you can sell it for market value, and then once it is sold you can withdraw the funds to the financial account you connected to the exchange. Keep in mind that you will be taxed on any gains made selling cryptocurrency in the USA, similar to any situations where there are capital gains. It’s similar to how the government views the stock market.
Is it Possible to Buy Other Cryptocurrency with Bitcoin?
Absolutely. Swapping different cryptocurrencies is actually much easier than buying cryptocurrency with fiat currencies (such as USD, CAD or EUR).
There are obviously quite a few more regulations surrounding traditional currencies (which can be a good or bad thing) but once you acquire cryptocurrency things will become much more fluid. It’s very easy to swap for different cryptocurrency, such as turning Bitcoin into Ethereum or vice versa. It’s actually relatively easy to start an account on multiple exchanges — provided you already have cryptocurrency. That’s because Exchanges require significantly less identity verification if you’re only going to be swapping cryptocurrency. Sometimes an email address will be enough.
Buying cryptocurrency with traditional currency is often going to be the most difficult part of getting involved with the cryptocurrency market.
