How Crypto Debit Cards Work

Crypto is not automatically deducted and spent when you swipe your crypto-funded debit card. The process is a lot more involving than what articles and videos online might lead you to think.

With that stated, it is important to understand the process behind the scenes because that will help you make decisions based on convenience, fees, and even taxes to be paid.

First though, what exactly is a crypto debit card?

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For cryptocurrencies like Bitcoin to be money you can use to settle bills and debts as well as shop, the merchants must accept them. You can buy items from Overstock and pay with Bitcoin. Indeed, you might even order your Tesla using crypto. However, the number of stores that accept crypto is still negligible.

If you walked into a random store and asked to pay in Bitcoin, they are likely to wonder what you are talking about, not know how to accept it or be simply not interested.

A crypto card that is Visa, or Mastercard branded, opens up the possibility of you shopping in millions of stores around the world using cryptocurrencies. While you pay in Bitcoin or ETH, the company that issues the card buys the crypto at the reigning market price and sends “fiat” money to the merchant’s bank account. The company acts as an intermediary and also exchange that converts between crypto and fiat.

Some of the companies that issue crypto debit cards include exchanges like Binance and Coinbase. Others are payment processors like BitPay. We also have membership clubs like ClubSwan.

To offer this service, crypto debit card issuing companies are registered and regulated like other financial institutions. To reach millions of online and brick-and-mortar stores,  they also have partnerships with established payment processors like Visa and Mastercard.

How crypto debit cards work

How the cards work is different and unique for each brand. Some have simple processes of ‘topping up’, while others are a little more complex.

Generally, you have to manually convert from crypto to fiat and load the card before going out to shop. This you can do through a mobile app or a dashboard on a portal.

However, there are a few cards that are designed to convert whenever you swipe automatically.

With the majority of the cards, you can choose from several options of loading fiat. The following are the most common ways you can follow to top up your card:


This is the least complex way to load your crypto card. The steps involved include the exchange buying your crypto at the reigning market price and depositing fiat in your linked bank account. The final step is you manually topping up your card on the app or portal dashboard.

ClubSwan is an example of a crypto-funded card that uses this process. The platform allows you to hold funds both in crypto and fiat. While the crypto is held in a wallet you fully control, the fiat is in a normal bank account that comes with the service. You can move between the two whenever you need to.


Some users prefer holding their funds instablecoin, a digital token on the blockchain-backed by the US dollar (fiat), or any other asset. The stablecoin can protect you from high volatility in the crypto market, and it is easier to move around than, say, actual dollars.

You can easily sell the stablecoin for the actual fiat before loading whenever you want to spend through your card.

If you are one of those who prefer holding stablecoins, you can exchange your crypto on Coinbase, for example, and receive USDC, pegged to the US dollar at a 1:1 ratio. You can then transfer the stablecoin to your wallet, where you can sell it for US dollars before topping up your debit card.


With some debit cards, you don’t need to sell stablecoins manually. You can spend them directly. While you seem to spend the stablecoin every time you swipe, the system sends actual dollars into the store’s bank account. The system then takes up the rest of the process.

The Coinbase debit card is one of those that allow you to keep and spend your balance in stablecoin (USDC). However, you can still spend your crypto directly or by bypassing stablecoin.

Choosing the path to load your card

You need to consider several factors when deciding the path to take to load your crypto debit card.

The first is the service provider you are using. You can only use a path that your service provider makes possible. For example, if you use ClubSwan, you can only convert directly from crypto to fiat.

The second is your investment strategy. For example, if you are a HODLer, you might prefer having your funds in crypto and only converting what you need immediately to shop.

Another factor to consider is the tax implications. Every purchase you make can become a complex tax event, especially in jurisdictions where crypto is considered a property. The more purchases you make using crypto, the more records you might need to keep.

However, if you convert to fiat once and spend the acquired fiat on many transactions, you have a single crypto-related tax event to report.

The fees charged is another factor that influences how you load your wallet. The more steps you need to take before your card is ready for shopping, the more fees you are likely to pay.

It is necessary that you understand how crypto debit cards work, especially the steps you need to take. That will help you make critical decisions regarding such things as convenience, taxes, and fees.

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