Jacquelyn Melinek

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 <li>The direct deposit launch was driven by customer feedback that “making frequent transfers is time-consuming and inconvenient,” Coinbase said</li>
 <li>The company also announced its debit card ‘Coinbase Card’ will be rolling out general availability for US customers starting this Fall</li>
 </ul>
 
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Coinbase users will soon be able to directly deposit any percentage of their paycheck into their accounts on its crypto-exchange platform, <a href="https://cms.blockworks.co/coinbase-ceo-50-of-the-people-he-spoke-to-in-dc-think-crypto-is-a-risk/" target="_blank" rel="noreferrer noopener">the company said</a> on Monday.&nbsp;



“We are rolling out direct deposit to the first customers over the next few weeks. We are starting with customers in the US and plan to roll it out to more countries in the future,” Coinbase Senior Director of Product and Head of Payments &amp; Financial Hub Prakash Hariramani said in an email to Blockworks.



The US-based company has over 100 digital assets listed on its exchange and about 68 million verified users across over 100 countries, which is up 58% from 43 million users at the end of 2020.&nbsp;



Users can get paid in any of the cryptocurrencies available on the crypto exchange or opt for US dollars on the platform, the company said. The company has also partnered with a number of companies, including M31 Capital, Nansen, and SuperRare Labs to help businesses pay employees in crypto.&nbsp;



“Choose to get paid in crypto so you can make recurring buys or earn interest on your income (by getting paid in USDC, DAI, or other interest-yielding assets), or choose to get paid in US dollars,” the company said in a statement.&nbsp;



Prior to the direct deposit announcement, in order to buy, sell or trade cryptocurrencies on Coinbase, users had to transfer their funds from personal bank accounts, another crypto-exchange, or personal wallets.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We heard regularly from our customers that making frequent transfers has been time-consuming and inconvenient for them,” Hariramani said. “Our goal with direct deposit is to make it easier for our customers to make regular crypto investments by automating the process,” Hariramani added.&nbsp;</blockquote>



Users can manually set up the new direct deposit service or have Coinbase automatically update paycheck allocations through the application. There are no transaction fees on the conversion of direct deposit funds from USD to cryptocurrency, the company said. However, it noted that a spread applies when users buy, sell or trade cryptocurrencies.



<h3 class="wp-block-heading">Other ways to spend</h3>



The company recently launched its <a href="https://www.coinbase.com/card" target="_blank" rel="noreferrer noopener">Coinbase Card</a>, a Visa debit card that gives up to 4% back in crypto rewards on eligible purchases. In June, some people were invited off the waitlist, but the card will begin rolling out general availability this Fall for all US-based customers, excluding Hawaii residents, a spokesperson told Blockworks. 



Earlier this year, other cryptocurrency companies like <a href="https://cms.blockworks.co/gemini-mastercard-to-launch-crypto-rewards-card/" target="_blank" rel="noreferrer noopener">Gemini</a>, <a href="https://cms.blockworks.co/blockfi-releases-visa-rewards-credit-card-to-us-clients/" target="_blank" rel="noreferrer noopener">BlockFi</a> and <a href="https://cms.blockworks.co/sofi-offers-crypto-for-credit-card-rewards/" target="_blank" rel="noreferrer noopener">SoFi</a> launched reward cards that let cardholders earn percentages back in crypto-based rewards on their purchases.



Coinbase has Money Transmitter Licenses <a href="https://www.coinbase.com/legal/licenses" target="_blank" rel="noreferrer noopener">in most states</a>, and its Visa card is issued by financial services company MetaBank, however Coinbase itself does not clarify if direct deposits held in US dollars are protected by Federal Deposit Insurance Corporation guarantees. <a href="https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured" target="_blank" rel="noreferrer noopener">Documentation</a> from Coinbase clearly indicates that USDC, the platform’s primary stablecoin — as well as any cryptocurrency balances — are not insured.



According to the company, when US customer funds are held as cash, &#8220;they are maintained in pooled custodial accounts at one or more banks insured by the FDIC&#8230;in a manner to make available pass-through FDIC insurance up to the per-depositor coverage limit then in place (currently $250,000 per individual),” however, pass-through insurance typically <a href="https://www.sewkis.com/publications/fdic-requirements-for-pass-through-deposit-insurance-in-brokered-deposit-programs/">does not apply</a> to pooled custodial accounts under US law, and this implied-guarantee has never been put to the test.



Coinbase is also exploring additional use cases for crypto payroll, Hariramani said, but he did not share any additional details for future plans. “As crypto becomes more mainstream, users and employers will continue to benefit from a crypto payroll solution,” he added.



<h3 class="wp-block-heading">Growing demand for direct deposits into crypto</h3>



Coinbase isn’t the only platform to see demand for direct deposits, either.&nbsp; Chris Kline, COO and co-founder of Bitcoin IRA, a platform for holding digital assets in retirement accounts, said that he’s seeing an uptick in requests from users to be able to add portions of their paychecks to their self-directed IRA accounts.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“People actively designating a piece of their payroll to be turned into bitcoin and then securely having it added to their personal savings wallet is a trend I think we’ll continue to see,” Kline added.</blockquote>



Even though digital asset prices are notoriously volatile, Kline said he thinks direct deposit of cryptocurrencies will also see more widespread adoption soon. “This is a positive for the crypto ecosystem because it means more participants will be taking part in an engaging asset class, leading to more active and engaged investors watching their personal finances.”



This story has been updated on September 27, 2021, at 4:44 pm ET



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