The Avalanche Foundation has launched the Avalanche Card, a Visa-powered payment card enabling users to spend cryptocurrency at traditional fiat merchants.
What is the Avalanche Card?
The Avalanche Card is a crypto-powered payment card created in collaboration with liquidity provider Rain. It allows users to spend their digital assets wherever Visa is accepted. The card is available as both a physical and digital card, supporting AVAX, Wrapped AVAX (wAVAX), USDT, and USDC at launch, with plans to add support for more cryptocurrencies. Crypto funds are converted to fiat when transactions are processed, bringing real-world utility to cryptocurrencies.
Other Key Features: - No need for a crypto exchange or DeFi platform. - Offers spending alerts, PIN changes, and freeze options. - Provides daily batch settlements instead of instant conversions. - Requires identity verification for issuance.
Why the Avalanche Card Matters?
Millions of people in regions like Latin America, Africa, and Southeast Asia face high banking fees, inflation, and limited access to financial services. The Avalanche Card offers an alternative financial solution, allowing users to bypass traditional banking restrictions and use their crypto for everyday expenses.
According to the Avalanche team, the key benefits include: - Empowering financial freedom in underbanked regions. - Reducing reliance on banks for cross-border payments and daily expenses. - Seamlessly integrating crypto into mainstream finance.
However, due to regulatory restrictions, residents of some regions are not eligible, including Cuba, Venezuela, Nicaragua, Russia, North Korea, Syria, Iran, Crimea, Luhansk, and Donetsk. Initially, the Avalanche Card is available in Latin America, the Caribbean, and 35 U.S. states, with 15 states excluded due to regulations.
How the Avalanche Card Works?
Unlike typical prepaid crypto debit cards, the Avalanche Card operates more like a credit card. Users load the card with crypto, and this sets their spending limit at 50% of the USD value of their balance to account for volatility. The crypto isn't immediately sold at the time of purchase; instead, transactions accumulate and are settled once a day at a fixed time. The card allows users to freeze their balance, dispute charges, change PINs, and set up spending alerts. This delayed conversion model helps users maximize the value of their assets by avoiding sales during adverse market fluctuations.
Using the Avalanche Card may result in tax obligations depending on the assets spent. Spending USDC stablecoins does not create a taxable event, while selling other cryptocurrencies to fund purchases may be taxable. Users are advised to consult tax professionals to understand their obligations.
