Key Takeaways
- To buy crypto in the USA, pick a trusted exchange, select a legal exchange, complete KYC verification, fund your account, and decide how to store your coins securely.
- Selling is just as simple: transfer your coins to an exchange, set your price, and sell and withdraw your money.
- Stay informed on the USA’s crypto regulations, taxation rules, and secure storage practices to make sound trading decisions.
Cryptocurrency is becoming a major part of the financial world in the US, with millions of people using it for investing and trading. Platforms like Coinbase, Binance.US, and Kraken make it easy to buy and sell digital currencies securely. The US government regulates cryptocurrency as property, so there are clear tax rules for transactions. With payment options like ACH bank transfers, credit cards, and PayPal, getting started with crypto is simple and accessible.
This guide covers the key steps, from choosing the right exchange to understanding tax rules, to help you confidently discover the US cryptocurrency market.
How to Buy Cryptocurrency in the US?
Buying cryptocurrency in the US is simple when you follow the right steps. With regulated platforms, diverse payment methods, and clear tax rules, the process is straightforward. This guide explains everything you need to know to get started.
Choose a Cryptocurrency Exchange
The first step is selecting a reliable exchange. In the US, many platforms are regulated and offer features tailored to American users. Some top choices are Coinbase, Kraken, Binance.US, Gemini, eToro, etc. Beginners may prefer Coinbase for simplicity, while Binance.US is better for low fees and variety.
Ensure the exchange complies with US regulations. Look for FinCEN registration and state licenses. Also, compare deposit, trading, and withdrawal fees. Check if the platform supports the coins you’re interested in buying.
Sign Up and Verify Your Identity
Creating an account is straightforward but involves mandatory identity verification.
Registration: Provide your email, create a strong password, and agree to the terms.
KYC Process:
- Submit your Social Security Number (SSN) for tax reporting purposes.
- Upload a government-issued ID (driver’s license, passport, or state ID).
- Provide proof of address (utility bill or bank statement).
- Some platforms may ask for a selfie or live video for identity verification.
Enable two-factor authentication (2FA) for added protection. Verification can take from a few minutes to 24 hours, depending on the platform.
Deposit Funds to Your Exchange Wallet
After verifying your account, you’ll need to fund it with US Dollars (USD) to buy cryptocurrency. The following are the good payment options:
Bank Transfers (ACH): Widely supported, free or low-cost, and takes 1-3 business days.
Wire Transfers: Faster but often come with bank fees (up to $30).
Credit/Debit Cards: Instant deposits but higher fees (2%-4%).
PayPal: Supported by platforms like Coinbase for quick transactions with convenience.
Steps for Depositing:
- Link your bank account, card, or PayPal to the exchange.
- Choose the amount to deposit in USD.
- Follow the platform’s instructions to complete the transfer.
ACH transfers are cost-effective, while cards and PayPal are faster for immediate purchases.
Select the Cryptocurrency to Buy
Once your funds are available, choose the cryptocurrency you want to buy. Popular options in the US include Bitcoin (BTC), Ethereum (ETH), USDC and USDT.
Research the coin’s use case and potential growth. Stablecoins are less volatile compared to assets like Bitcoin or Ethereum.
Place a Buy Order
Now that your funds are ready, you can buy cryptocurrency:
Navigate to the “Buy” section of the exchange.
Enter the amount in USD or crypto (e.g., $100 of Bitcoin or 0.002 BTC).
Choose your order type:
- Market Order: Buy instantly at the current price.
- Limit Order: Set your target price; the order will execute when the market reaches it.
Confirm the purchase. The cryptocurrency will appear in your exchange wallet after the transaction is complete.
Market orders are fast, while limit orders are better if you want to control the price.
Store Your Cryptocurrency Securely
After buying, you need to decide where to store your crypto.
Exchange Wallets: These are convenient for frequent trading but are vulnerable to hacking.
External Wallets:
- Hot Wallets: Apps like MetaMask or Trust Wallet are suitable for quick access.
- Cold Wallets: Offline devices like Ledger or Trezor are ideal for long-term storage and security.
Backup Your Wallet: Write down your wallet’s recovery phrase and keep it in a safe place. Never share it with anyone.
Understand US Tax and Reporting Requirements
The IRS considers cryptocurrency property, and buying crypto itself is not taxable. However, selling, trading, or earning crypto triggers tax obligations.
- Use Form 8949 to report gains or losses.
- Keep records of all transactions, including purchase prices and dates.
Many US exchanges, like Coinbase, provide annual transaction summaries to make tax reporting easier. Use crypto tax software like CoinTracker or ZenLedger to simplify reporting.
How to Sell Cryptocurrency in the US?
Here’s a straightforward guide to help you convert your digital assets into US Dollars (USD) or another cryptocurrency while ensuring security and compliance.
Transfer Your Crypto to the Exchange
If your cryptocurrency is stored in an external wallet, you need to transfer it to the exchange where you plan to sell.
Find Your Deposit Address: Log in to the exchange, go to the wallet section, and select the cryptocurrency you want to sell. Copy the deposit address.
Send Crypto from Your Wallet: Use the external wallet to transfer the crypto to your exchange account. Double-check the address to avoid errors, as transactions cannot be reversed.
Be aware of blockchain network fees, which vary depending on the cryptocurrency (e.g., Bitcoin, Ethereum). Transfers usually take minutes but can vary depending on network congestion.
Select the Amount to Sell
Once your cryptocurrency is in the exchange wallet, you can start the selling process:
Go to the “Sell” section or the platform trading interface.
Enter the amount you want to sell, either in cryptocurrency (e.g., 0.1 BTC) or its equivalent value in USD.
Check the current price to ensure you are satisfied with the sale value.
Choose Your Sell Order Type
US-based exchanges typically offer two main order types for selling:
Market Order: Sell immediately at the current market price. This is the fastest way to convert crypto to USD.
Limit Order: Set a target price. The transaction will execute only when the market reaches your specified price.
Use a market order for quick transactions and a limit order for strategic selling at a desired price.
Convert Crypto to USD or Another Asset
Once the sale is executed, the proceeds will appear in your exchange wallet in one of the following forms:
- US Dollars (USD): The most common option for cashing out.
- Stablecoins (e.g., USDC, USDT): If you plan to reinvest later or avoid price volatility, convert your crypto to a stablecoin.
Withdraw USD to Your Bank Account
To access your funds, withdraw USD from the exchange to your linked bank account. Here’s how:
Link a Bank Account: Ensure your US bank account (e.g., Chase, Bank of America, Wells Fargo) is linked to your exchange wallet. Most platforms require account verification, which includes submitting bank details and verifying ownership.
Choose a Withdrawal Method:
- ACH Transfer: Free or low-cost option, processed within 1-3 business days.
- Wire Transfer: Faster but may incur fees (up to $30). Funds are usually received on the same day or within 24 hours.
- PayPal or Debit Card: Platforms like Coinbase allow instant withdrawals to PayPal or debit cards for a small fee.
ACH is ideal for regular transactions, while wire transfers are better for larger amounts.
Top Cryptocurrency Exchanges in the US
Here’s a closer look at the most popular cryptocurrency exchanges in the US and why they are widely used.
Coinbase
Coinbase is one of the most well-known cryptocurrency exchanges in the US, especially for beginners. It stands out because of its simple interface, making it easy for anyone to buy, sell, or hold cryptocurrencies. Coinbase allows users to link their bank accounts and use ACH transfers or credit cards to fund their accounts quickly. Its mobile app is highly rated, offering a smooth experience for trading on the go.
What makes Coinbase even more appealing is its compliance with US regulations. It is a publicly traded company, which adds to its trustworthiness. Additionally, funds in USD wallets are insured up to $250,000, similar to traditional banks. The platform also provides educational resources, which reward users with free crypto tools to learn about various tokens. This feature has made it a favorite for people new to the crypto world.
Binance.US
Binance.US is the American arm of the global Binance exchange, tailored specifically to meet US regulations. It is popular for its low trading fees, which are among the lowest in the industry. Binance.US offers access to a wide range of cryptocurrencies, making it a good choice for traders who want variety.
The platform also provides advanced trading tools, such as charting features and various order types, which appeal to more experienced traders. Although it has a more complex interface compared to Coinbase, Binance.US is a top pick for users who want to save on fees and have access to a broader selection of tokens.
Kraken
Kraken is another major player in the US crypto market and is known for its strong focus on security. It has never been hacked, which is a significant accomplishment in the cryptocurrency industry. Kraken supports a wide range of cryptocurrencies and offers features like staking, where users can earn rewards by holding specific tokens.
What sets Kraken apart is its advanced trading features, such as futures and margin trading. These tools make it a favorite among professional traders. However, Kraken also caters to beginners with its simple “Buy Crypto” option. Its 24/7 customer support and transparent fee structure are additional reasons why it’s trusted by many in the US.
Gemini
Gemini is often referred to as one of the most secure exchanges in the US. It was founded by the Winklevoss twins and is known for its strong regulatory compliance. Gemini has strict security protocols, including insurance for digital assets held in its wallets.
The platform is designed for both beginners and experienced traders. Its interface is clean and easy to navigate, while its “Gemini ActiveTrader” tool offers advanced features like real-time order books and charting. Gemini is also one of the few exchanges that support interest-earning accounts, allowing users to earn yields on their cryptocurrency holdings.
eToro
eToro is gaining popularity in the US due to its unique social trading features. It allows users to follow and copy the trading strategies of successful investors. This feature makes it particularly appealing to beginners who want to learn by observing experienced traders.
The platform supports a decent range of cryptocurrencies and offers a simple, user-friendly interface. eToro also provides a free demo account, where users can practice trading with virtual funds before using real money. Its focus on social and educational features has helped it carve out a niche in the competitive US market.
Robinhood
Robinhood started as a stock trading app but quickly became popular for cryptocurrency trading. It appeals to beginners with its commission-free trading model, which means users don’t pay fees for buying or selling crypto.
However, Robinhood has some limitations. It supports fewer cryptocurrencies compared to other exchanges, and users don’t have access to their private keys. This means your crypto is stored on the platform, and you can’t transfer it to an external wallet. Despite these drawbacks, Robinhood remains a popular choice for those who want an easy way to start trading crypto alongside stocks and ETFs.
Key Considerations Before Choosing a Cryptocurrency Exchange in the US
Regulation and Compliance: Select exchanges that follow US laws and are registered with FinCEN. Regulated platforms like Coinbase and Gemini offer more security and legal backing.
Supported Cryptocurrencies: Check if the platform supports the coins you want to trade. For a wide range of purposes, platforms like Binance.US or Kraken are ideal.
Fees: Look for transparent fee structures. Binance.US offers low trading fees, while Coinbase may charge more for convenience.
Payment Methods: Ensure the exchange supports methods like ACH transfers, wire transfers, or credit cards. Coinbase also allows PayPal withdrawals.
Security: Look for 2FA, cold storage for assets, and insurance coverage like those offered by Gemini and Coinbase.
User Experience: Beginners should opt for simple interfaces like Coinbase, while advanced users may prefer Binance.US or Kraken.
Customer Support: Reliable support is critical. Exchanges like Kraken offer 24/7 assistance via chat or email.
Mobile App: For trading on the go, ensure the platform has a reliable app. Coinbase and Binance.US are excellent options.
Taxation and Regulations for Cryptocurrency in the USA
Cryptocurrency in the US is regulated as property, and transactions involving crypto are subject to specific taxation and compliance rules. Here’s an overview of what you need to know:
Taxation Rules for Cryptocurrency
The IRS considers cryptocurrency property and taxable events include selling, trading, or using crypto for payments. Key points:
Short-Term Gains: Crypto held for less than a year is taxed at your regular income tax rate (up to 37%).
Long-Term Gains: Crypto held for more than a year is taxed at lower rates (0%, 15%, or 20%, depending on income).
Taxable Events: Selling crypto, trading one crypto for another, and using crypto for purchases.
Non-Taxable Events: Buying and holding crypto or transferring between wallets.
Income Tax: Crypto earned through mining, staking, or as payment is taxed as regular income.
Reporting: Use Form 8949 to report gains/losses and Schedule D for your annual return.
Regulations for Cryptocurrency
In the US, cryptocurrency exchanges and businesses must comply with strict federal and state laws. Exchanges must follow KYC (Know-Your-Customer) and AML (Anti-Money Laundering) regulations, requiring identity verification like SSN and ID submission.
The SEC regulates tokens classified as securities, and platforms offering such tokens must register with the SEC. Federally, platforms must register with FinCEN as Money Services Businesses. Additionally, states like New York require specific licenses, such as the BitLicense, for operations.
By adhering to these rules, individuals and businesses can trade or invest in cryptocurrency while staying compliant with US laws.
Conclusion
The US crypto market offers a mix of convenience, security, and regulation, making it one of the safest places to trade and invest in digital assets. By selecting a trusted platform, following simple steps to buy or sell, and keeping up with tax requirements, you can take full advantage of the opportunities in the crypto space. Whether you’re a beginner or an experienced investor, understanding the basics will help you succeed in this exciting and growing market.
