Buying Crypto USA: Best US Crypto Exchanges & Wallets

Here are the Best Ways to Buy Crypto In The US

The safest way to acquire Bitcoin, Ethereum or whatever other coin you’re looking for is through a centralized exchange. To do so, you’ll have to sign up for an account. When you register, you’ll have to go through what’s known as a Know Your Customer (KYC) process. They’ll ask for some information and you’ll have to provide things like your full name, date of birth, and residential address to the exchange. Your identity must then be verified by providing them with a copy of a passport or government issued ID. Some exchanges may ask for more details, which might seem like they’re prying, but this is all standard procedure. This is required by the regulators. Once the exchange has verified your identity, then you can move on to the buying and selling part.

In summary here are the basic steps for buying crypto in the USA:

1. Choose an Exchange

The first step to getting cryptocurrency is deciding where you are going to purchase it. For most people, the most convenient (and cost-effective) way to acquire crypto is an exchange.

There are a variety of different factors to consider when picking a crypto exchange, but we’d argue that security and reputation should always be the most important consideration. In addition, here are some other factors to think about: software or user interface, fees, and the number of different cryptocurrencies available for purchase.

Here’s a shortlist of the best crypto exchanges.

2. Verify identity

Most cryptocurrency exchanges will require some form of verification (this is known in the industry as Know Your Customer or KYC). They will likely require some combination of bank account info, driver’s license or passport, proof of residency, and current photo. Don’t be dissuaded by this process as the most regulated (and secure) crypto exchanges are required by law to gather that information.

3. Purchase Bitcoin

Once you’ve funded your exchange account you should immediately be able to purchase Bitcoin or any other cryptocurrency at whatever the current rate is. Buying crypto on an exchange is generally a very easy process.

Crypto Storage Explained: How To Store Your Crypto

Once you’ve bought some crypto, you have a couple of options for storing it. You can choose a cryptocurrency hardware wallet, also known as cold or hot storage. Leaving it on an exchange is known as a hot wallet because there is some risk. An exchange can be hacked or some exchanges can go down. See Mt. Gox, for example. As for cold storage, that would be a hardware wallet like a Ledger.

One benefit of a hot wallet is if you forget your password, you can easily reset it and access your money. On the other hand, there’s the aforementioned risks with an exchange – although, the regulated, licensed exchanges aren’t really at risk. On the other hand, if you use cold storage and forget your password, your money will be inaccessible. You have a regular password and then your seed phrase as a backup, but if you lose both, your access is gone. That’s why it’s important to weight the pros and cons. Learn more in our “Do I Really Need a Hardware Wallet?” article.

Here are four basic steps to storing your crypto if you’re not leaving it on the exchange:

1. Get an external wallet

The first step in storing your crypto is to get an external wallet. You can download a software wallet like Exodus, a browser extension like MetaMask or TrustWallet, or buy a hardware wallet such as a Ledger Nano X.

2. Set Up Wallet and Get Receiving Address

After you get your wallet, you’ll need to set up a Crypto Wallet. Once the wallet is set up, you simply need to copy the receiving address for the currency you want to receive such as Bitcoin.

3. Wait for Withdrawal to Complete

Once you’re done with the withdrawal process on the exchange, you just have to wait for them to send you an email confirming that the withdrawal is complete. You’ll then find the crypto you withdrew at the address you provided. You can then manage it as you wish.

The Best Way to Buy Crypto in the USA Explained

This is up for debate, but most people would agree that a centralized exchange is certainly the easiest way to purchase cryptocurrency. After signing up for an exchange you’ll be able to buy and sell crypto from the comfort of your own home. The process is similar to how it works for popular stock broker websites like TD Ameritrade or E-Trade.

The important part, however, is to make sure that you sign up for reputable cryptocurrency exchanges. There have been some examples of shady exchanges going bankrupt and leaving their customers high and dry. Fortunately, the reliability of cryptocurrency exchanges has improved immensely over the last few years and we list some of the best crypto exchanges right here on CryptoVantage.

Conversely, some people prefer to use peer-to-peer cryptocurrency exchanges where customers in a specified region trade coins with each other directly. These types of centralized exchanges have some downsides, however, as it can be much more difficult to facilitate trades.

Understanding the best choice for Americans

A legal, reputable and regulated centralized exchange is certainly the safest way to make your purchase. There is a long history of unregulated companies going down, so if you want to take on that risk, that’s up to you. The safer play is a reputable exchange. Fortunately, the reliability of cryptocurrency exchanges has improved immensely over the last few years and we list some of the best crypto exchanges right here on CryptoVantage.

After signing up for an account at an exchange, you’ll be able to buy and sell at any point. You can use your computer, laptop, tablet, phone or any other mobile device. The process is similar to how it works for popular stock broker websites like TD Ameritrade or E-Trade.

As we strive for transparency here at CryptoVantage, we have to tell you that there are some peer-to-peer cryptocurrency exchanges where customers in a specified region trade coins with each other directly. Uniswap, for example, is a popular option. This would be considered a decentralized exchanged and they’re all unregulated. As mentioned, those types of sites come with some risks – if you choose to go that route.

Are There Any States Where Cryptocurrency is Banned?

There are no states where it’s banned. However, it’s more difficult to buy and sell in several states – including New York, Rhode Island, Arizona, and Hawaii. Texas also has some unique laws.

New York has implemented a policy where any business dealing with cryptocurrency must apply for a BitLicense, which has a $5000 application fee and 44 pages of compliance requirements. Since implementation, most other trading firms have moved out of NY state. It’s actually still very easy to buy crypto in New York on a licensed exchange like Coinbase or Kraken but you’ll have far fewer options as far as exchanges go.

Rhode Island assesses sales tax on all transactions and development, meaning that as a business you get taxed for accepting cryptos, but also for developing or researching them. Like NY, most firms have jumped ship.

Arizona has adopted the same policy as Rhode Island, taxing companies doing even just software development and imposing sales tax on any transactions. On the other hand, they’re one of the few states that allows you to pay your taxes using this modern currency, which is nice.

Meanwhile, Hawaii doesn’t have any laws against cryptocurrency but it requires all exchanges to have their entire balance backed up by traditional currency. Therefore, most major US-based exchanges have opted to not offer service to residents of the Aloha State. There are still a handful of other exchanges that service Hawaii — including Gemini and Kraken — but it is very limited.

FYI: You Can Also Sell Your Bitcoin

You don’t have to just buy and HODL. You can sell Bitcoin, Ethereum, Polkadot, Dogecoin or any other coin of your choosing through an exchange. The one caveat is that the exchange has to offer that coin.

To sell, simply deposit your Bitcoin (assuming it’s stored in your wallet, and not already on the exchange) onto the exchange. Once it is on the exchange you can sell it for market value or set limit orders. Once it is sold, you can withdraw the funds to your traditional banking account you connected to the exchange.

Keep in mind that you will be taxed on any gains made in the USA, similar to any situations where there are capital gains. Think of it like selling a stock: you could incur a capital gains tax if you’re in the money. And remember, there are short-term capital gains and long-term as well. Consult your account for the best practices.

Unpacking All the Cryptocurrency Options You Can Buy

While Bitcoin is the star of the show, there is quite the supporting cast. You can buy, sell or swap to other coins of your choosing. Again, the caveat would be that the exchange you’re using offers those coins. For example, there has to be a BTC-ADA pair if you want to trade from Bitcoin to Cardano directly. Otherwise, you’ll have to sell Bitcoin to cash, then buy Cardano in two separate transactions.

Always remember to keep in mind what you’re buying (or investing in). Many of the coins offered on the exchanges are the biggest, most well-known projects/blockchains. At the same time, each token has its own utility and purpose. Make sure you DYOR – as they say – and do your own research. Now that you know how to buy, our best advice is that you know what you’re buying.