The Avalanche Foundation has introduced the Avalanche Card, simplifying the use of cryptocurrency in everyday transactions. The card is Visa-backed and enables purchases at traditional merchants.
What is the Avalanche Card?
The Avalanche Card is a crypto-powered payment card created in partnership with Rain, acting as a liquidity provider. It allows users to spend digital assets wherever Visa is accepted, simplifying crypto payments. Available as both a physical and digital card, it supports AVAX, Wrapped AVAX (wAVAX), USDT, and USDC at launch, with plans to add other tokens, including bridged Bitcoin. Crypto funds are converted to fiat when transactions are processed. Key features include no need for a crypto exchange or DeFi platform, spending alerts, PIN changes, and freeze options, as well as daily settlements instead of instant conversions. Identity verification is required for issuance.
Why the Avalanche Card Matters
Millions of people, especially in Latin America, Africa, and Southeast Asia, face high banking fees, inflation, and limited access to financial services. The Avalanche Card provides an alternative financial solution, enabling users to bypass traditional banking restrictions and use their crypto holdings for everyday transactions. Key benefits of the card noted by the Avalanche team include empowering financial freedom in underbanked regions, reducing reliance on banks for cross-border payments and daily expenses, and seamlessly integrating crypto into mainstream finance. However, due to regulatory restrictions, residents of Cuba, Venezuela, Nicaragua, Russia, North Korea, Syria, Iran, as well as Crimea, Luhansk, and Donetsk are not eligible. Initially, the 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
The Avalanche Card operates like a credit card, unlike typical prepaid crypto debit cards. Users load the card with crypto, setting their spending limit at 50% of the USD value of their balance to account for volatility. Crypto isn't instantly 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, ensuring they don’t sell their holdings at an inopportune moment due to market fluctuations.
Using the Avalanche Card may trigger tax obligations depending on the asset being spent. Spending USDC stablecoins does not create a taxable event, whereas selling other cryptocurrencies to fund purchases may be taxable. Users are advised to consult tax professionals to determine their obligations.
