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Crypto Coach: How and where to buy cryptocurrency in the US
Purchasing cryptocurrencies in the US isn't as easy today as it was back in 2018. With increased regulation and anti-money laundering/know your customer (AML/KYC) compliances, knowing where to purchase cryptocurrency is as important as knowing how to buy it. Let's look at some of the centralized exchanges, or CEXs, where you can purchase crypto. These are some of my favorites:
There are many CEXs available in the US, but I have certain requirements when looking for an on-ramp to purchase crypto:
- It must have an easy user interface (UI) to work with, such as an easily navigable website or user-friendly app. A clunky UI isn't worth the hassle.
- It must be easy to transfer out of the exchange without any wait periods. Some exchanges won't let you withdraw for 24 hours.
- An exchange must have a decent set of coins to purchase and must have Bitcoin and Ethereum as its "gold" standards.
- It must have security controls such as IP restrictions and multifactor authentication.
- It must be fast. If I can't purchase my crypto quickly, I won't use it.
- I prefer an application programming interface (API) connection rather than a comma-separated values (CSV) file for my tax trading software. A CSV forces me to manually export trades from a CEX and upload them into my software. With an API connection, I can connect and automate end-to-end.
- I would rather purchase a coin from an exchange directly rather than use another coin to send to an exchange to swap for it. For example, if I want to purchase the coin ICON ($ICX), I'd rather purchase it directly from Crypto.com rather than buying Bitcoin ($BTC) from Coinbase and then sending my $BTC to Binance.US to swap for $ICX.
The easiest way to purchase crypto in the US and get started on this journey is to use either Coinbase or Cash App. Let's begin here.
Coinbase is the most popular exchange in the US for purchasing crypto with cash. If you are new to crypto and are looking to get your feet wet, sign up for a Coinbase account and input your personal information such as legal name, e-mail, valid state-issued IDs like a driver's license for identity verification (otherwise known as getting KYC-verified).
With your debit card, you can purchase cryptocurrency instantly. Once you sign-up you can pick a coin you want to purchase. In this example, I want to purchase Solana ($SOL). Coinbase allows me to purchase directly. I will purchase SOL and then transfer it to my Solana Wallet.
If you are new to crypto, start by purchasing Bitcoin or Ethereum. Stay with the big coins for now. You can purchase fractions of these coins, so there's no harm in purchasing a few dollars.
NOTE: See my tutorial on how to set up a Solana hot wallet. A hot wallet is a cryptocurrency wallet that's always connected to the internet, enabling the user to store, send and receive tokens. (Cold wallets aren't connected to the internet and are used to hold cryptocurrencies offline, preventing hackers from being able to access a user's holdings.)
Here is an infographic I created showing you how to purchase Solana using Coinbase in six steps:
The next on-ramp is Cash App and it's very easy to use. Simply download Cash App to your mobile phone and attach a debit card. Once that's complete, tap the Bitcoin icon and run through the KYC. You can only purchase $BTC through Cash App. (In a future column, I'll walk you through how to send that Bitcoin to an exchange to convert it to Ethereum or another cryptocurrency.)
You can purchase a small amount of Bitcoin, such as $5 worth, as shown on the right:
What exchanges do you like to use in the US? Please let me know in the comments below.
Acronyms in this column
API: Application Programming Interface is an online connection between computers or between computer programs, often between a data provider and an end-user.
CEX: Short for centralized exchange. CEXs include Coinbase, Binance.US and EToro.
CSV: A comma-separated values file is a delimited text file that uses a comma to separate values. Each line of the file is a data record and is typically used as an import into tax software. CSV files can be downloaded from one's CEX.
KYC: Know Your Customer. CEXs require identity verification in the US before you can buy or sell cryptocurrency.