With Bitcoin reaching fever-pitch prices in mid-December 2017, more investors are looking to get in on the action.
Many would-be newcomers still have suspicions about the industry due to the number of scams, security breaches at cryptocurrency exchanges and uncertainty over government regulations.
There is also some doubt whether investors can still buy Bitcoin in the USA.
In February 2018, the country’s four largest banks issued a crackdown banning the purchase of cryptocurrencies with a credit card.
The move was orchestrated to protect investors against the potential collapse of cryptocurrencies. However, US residents are still free to buy cryptocurrencies via debit card or bank transfer.
The question is where to buy Bitcoin in the USA!
This article walks you through the pros and cons of the best ten cryptocurrency exchanges in the US and includes:
- How to buy cryptocurrency in the USA
- Local Bitcoins
- Liberty X
- Legality of investing in cryptocurrencies in the US
How To Buy Cryptocurrency In The USA?
If you don’t already own Bitcoin or altcoin, your first step into the world of digital currency will most likely be through an online exchange that accepts fiat currency.
It should be noted that some exchanges are cryptocurrency to cryptocurrency only purchases which means you won’t be able to use the exchange unless you already own Bitcoin or another digital token.
To build a cryptocurrency portfolio, you will need to use both types of exchanges as crypto-only exchanges invariably have a much broader choice of coins to buy.
You should also note that exchanges only carry specific cryptocurrencies, so some of them will not have the coins you want. This is because laws and regulations make it difficult for exchanges to sell digital tokens with fiat currencies.
However, for entry-level investors, you will need to buy Bitcoin or Ethereum which are readily available from all cryptocurrency exchanges in the USA. Therefore, you shouldn’t experience any problems buying your first Bitcoin.
Let’s dive straight in shall we.
The San Fransisco-based exchanged is one of the most active cryptocurrencies in the world. Its popularity is mostly due to its vast range of available cryptocurrencies, the most prominent collection of any exchange in the United States.
Another advantage for investors is that the Poloniex platform offers margin trading – something of a rarity in the cryptocurrency market. The fee structure is also advantageous to subscribers; 15% fees for makers and 25% for takers.
Perhaps the only downside to Poloniex is the security breach suffered shortly after opening in 2014. However, the company did refund their customers and had tightened their security measures.
- Multiple altcoins available
- Margin trading altcoins on offer
- High liquidity
- Processing times slow
- The culture of pump and dump
- Poor customer support
Coinbase is another of San Francisco’s big-hitters and one of the most established crypto exchanges in the world.
Boasting over 12.4 million customers, the platform serves 32 countries, trades around $40bn and is considered one of the safest and trustworthy exchanges around.
Regarded as a beginner friendly platform, Coinbase is one of the few exchanges that set the price of digital tokens based on their market value which ultimately makes it easier and faster for customers to purchase Bitcoin.
The transaction fees charged by Coinbase are not the cheapest but are slightly lower than other platforms that work with a similar business model. Fees are charged at 1.49% on bank transfers and 3.99% on debit card purchases.
- High liquidity and buying limits
- Easy for beginners to buy Bitcoins
- FDIC insured
- Limited currencies available
- Slow customer support service
- Coinbase track your spending activity
Gdax is owned by Coinbase and was established to focus on heralding Bitcoin as a valuable asset.
Subsequently, the platform only allows users to trade Bitcoin but is an ideal starting place for cryptocurrency newcomers providing you have some understanding of stock markets.
The interface is not so beginner-friendly and can be confusing.
Like its sister company, GDAX introduced margin trading to make it possible for customers to increase trading value without owning assets – meaning you can sell the tokens of other sellers without actually owning them yourself and earn funding for transactions.
Predominantly used by customers in the United States and the EU, Gdax offers 0% transactions fees for customers in these regions and charges low customer fees between 0.1% and 0.25% depending on trading volumes.
- Quick processing times
- Low fees for US customers
- 0% transaction fee on Bitcoin
- User-interface is not easy to navigate
- Best used by experienced traders
- Customer support could be better
Headquartered in San Francisco, Kraken is regarded as one of the best Bitcoin exchanges in the world.
The company has a good reputation, provides a secure platform and has advanced order types including stop-loss orders.
The advantages of using the Kraken platform is it offers high liquidity, low transfer fees, fast finding and margin trading. However, depositing fiat currency in US-dollars is expensive and exchanging other cryptocurrencies is not available.
- Well-financed and trusted exchange
- Potentially low fees
- High liquidity
- Performance dips during peak hours
- Customer support slow to respond
- iOS mobile app only
Founded in 2015, Gemini is one of the younger cryptocurrency exchanges in the USA but is quickly building a solid reputation as a reliable platform. Given the platform only trades in Bitcoin and Ethereum, Gemini is a good starting point for beginners.
One of the main reasons for their success is because Gemini provides superior customer support than its competitors, which in the sphere of cryptocurrency exchanges is a pretty low bar.
Another advantage is the company charges some of the lowest withdrawal and deposit fees in North America, and unlike most other exchanges, allows you to start trading as soon as you deposit funds into your account.
However, at 0.25% maker and taker fees are pretty high.
- Offers high security and compliance
- A modern cold storage system
- Trustworthy and regulated exchange
- Small selection of coins
- High trading fees
Operating out of Las Vegas, Bittrex is regulated and offers a wide choice of digital tokens including newer coins. Bittrex is also hailed for having one of the better customer service support teams on the US exchange circuit.
The platform also boasts one of the most reliable security systems and leverage an elastic multi-stage cold storage wallet that moves 80-90% of their funds offline where cybercriminals can not hack it.
Deposits and withdrawals can be made with US dollars so is a good option for newcomers. Transactions are processed quickly although Bittrex charges a 0.25% flat rate which is among the most expensive crypto trading platforms.
- Fast sign up and verification
- Speedy transaction fees
- Good selection of altcoins
- High trading fees
- No margin trading
- Complex and lengthy verification process
Although Coinmama was registered in Slovakia and is headquartered in Isreal, the exchange platform had a significant presence in the United States and regarded as one of the easiest ways to buy Bitcoin in the US market.
Investors can purchase coins by debit card or Western Union transfer, but does not allow customers to trade or sell coins on the platform. The reason for this is to make the platform more secure for customers.
To liquidate your investment or exchange Bitcoin for other altcoins, transfers are conducted through the company’s holdings. Although Coinmama is beginner friendly and offers instant delivery, transaction fees are at the higher end.
Coinmama is also pretty beginner friendly and focuses on credit and debit card purchases. They have instant delivery and can sell Bitcoin and Ethereum to almost all US States, and most countries. Coinmama’s fees are a bit on the higher end at 5.5%.
- Highest limits for buying Bitcoin
- Easy to use
- Good customer support
- 5.5% transaction fees
- Limited choice of coins
- Complex exchange protocol
BitQuick represents an alternative way for investors to buy Bitcoin with little hassle. The exchange only accepts cash but gives US investors easy access to cryptocurrencies – especially if your bank is refusing to allow Bitcoin purchases with a credit card.
The company is also doing its best to build a reputation as a reliable and trustworthy exchange. When the platform was hacked in 2016, it closed down the system to conduct a thorough investigation and implement a secure network.
- Fast way to purchase Bitcoin with cash
- Cares about its customers
- Simple verification process
- Charge markup on Bitcoin price
- Privacy levels not as high as other exchanges
- No online option, have to visit a bank
Local Bitcoins is a peer-to-peer Bitcoin exchange based out of Helsinki in Finland but is widely available across the USA except for New York which the company evacuated from due to licensing laws.
The advantage of the platform is that buyers and sellers agree on a price for the Bitcoins, but this can prove to be a disadvantage if you are unfortunate to be dealing with a hard seller. Until a fee is agreed deposits are held in an Escrow account.
Most Bitcoin transactions are cash exchanges, and users have a good choice of payment methods. The model makes it easy, convenient and safe to purchase your first Bitcoin.
- Excellent privacy settings
- Accepts various payment methods
- Easy access to Bitcoin
- Susceptible to scams
- Charges higher rates when buying with cash
- Low purchase limit
Liberty X is another cryptocurrency exchange service that has popped within the last five years to provide investors with a quick and convenient way of investing in Bitcoin using cash only payments.
Cash purchases have a low transaction fee (1.5%) but customers are charged storage fees together with a variable fee that is added by participating stores so can be a costlier option than other exchanges.
However, the exchange does boast superior security measures which some investors feel is worth paying the storage fee for.
Unlike other coins for cash exchanges, Liberty X ask for ID verification which may be a bind for some investors but proves the company’s authenticity to others.
- Easy access to Bitcoin
- Complies with trading regulations
- $1000 daily limit
- Hidden fees
- Signing up with Facebook degrades privacy
Legality Of Investing In Crypto In The USA
Although cryptocurrency trading is legal in the USA, the U.S Securities and Exchange Commission warns investors to “exercise caution” when using exchanges.
Officials are concerned about the number of security breaches within the industry and have told investors they will not be able to reimburse any financial loss suffered.
In December, President Trump passed a new bill dealing with regulations that instruct cryptocurrency exchanges to request ID verification to sell digital tokens to customers.
At the time of writing, CBN report that few companies have complied with regulations.
The Internal Revenue Service is also stepping up their game to track down Bitcoin investors that are evading paying tax.
Cryptocurrencies are classed as taxable assets, and anyone found to be hiding their earnings from the tax office will be ordered to pay criminal penalties.
The IRS has provided very little guidance with regard taxation costs on Bitcoin, but it is known they class cryptocurrencies as capital gains which will be charged at the average rate. Losses will be offset by gains to reduce tax liabilities.
Short-term capital gains are taxed at the same rate as your income and long-term gains taxed at a reduced rate of 15 to 23.8 percent depending on the tax bracket you fall into.
This list is not exhaustible but if your not sure how to buy Bitcoin in the USA or the most reliable exchanges to trade with, our top ten is a safe place to start.
Read more on How To Buy Ripple From The USA.