Cointelegraph contacted the eight major providers of Bitcoin debit cards with the question: Can Bitcoin debit cards really be private or anonymous? Below are the results, categorized by region and level of disclosure required.
One of the main advantages of using Bitcoin over traditional funding methods is privacy. When a Bitcoin transaction is sent, its record is permanent and public on the blockchain, but not tied to any particular identity.
Many users, such as those who frequented the Silk Road, prefer Bitcoin for exactly this reason: it’s anonymous and private.
However, one of the major challenges of using Bitcoin is the limited number of merchants and services that accept it as payment. Enter Bitcoin debit cards, a product that takes Bitcoin and converts it into currency for use at traditional merchants.
The challenge with Bitcoin debit cards is that, by and large, they tend to require the same level of financial disclosure of traditional financial institutions.
While this is still an advantage over banks, which can shut down the account of a customer at any time under any pretense (especially under pressure from government), it still does not constitute financial privacy.
Coinbase has a debit card, the Shift card, which pulls Bitcoin directly from the customer’s Coinbase wallet for each transaction. This is convenient, since it saves customers from having to keep their Bitcoin wallet separate from their card’s wallet, and topping up the card’s balance prior to transactions, instead making using Shift one unified, streamlined process. In this sense, Shift is closest to a true Bitcoin debit card.
Unfortunately, the Shift card is not available in every state in the US, so potential customers in New Hampshire, Connecticut, New York, Hawaii, Maryland, Georgia, West Virginia, Minnesota, and Arkansas are out of luck.
As far as privacy is concerned, Coinbase is fully compliant with AML/KYC regulations, and as such requires full customer identification. We attempted to reach Coinbase regarding privacy with Bitcoin debit cards, but company representatives declined to comment.
At present, BitPay is the only Bitcoin debit card available across the entire United States, in all of the 50 states. Unlike Coinbase’s shift, and like every other card on this list, BitPay’s card is a prepaid card with a balance in traditional currency (once converted from Bitcoin).
BitPay requires full identification in order to use its card. However, unlike every single other card, it does not require the submission of any identifying documents. Instead, BitPay requires users to submit a Social Security number during their application process. While this amounts to the same level of financial disclosure as any other card, it is still a vastly streamlined process, making BitPay’s the most painless verified Bitcoin debit card to acquire.
When contacted, BitPay representatives declined a comment to be quoted, but drew from the terms and conditions to answer the question regarding privacy:
“Federal law requires all financial institutions and their third parties to obtain, verify, and record information that identifies each person who obtains a Card. What this means for you: When you apply for a Card, we will ask for your name, address, date of birth, social security number or country identification number, and other information that will allow us to identify you. We may also ask to see your driver's license or other documentation bearing your photo as verification of your identity.”
One of the main cards in use in Europe and beyond, the Xapo card gained fame for its use by Uber in Argentina after the ride-sharing company was denied service by traditional card companies. The card is currently not available in a long list of countries, foremost among them being the United States. It also requires full financial disclosure.
Anni Rautio, Product Manager for Xapo, does not think financial anonymity is possible for Bitcoin debit cards, unless Bitcoin is used for a prepaid debit card.
“As long as debit cards - bitcoin or otherwise - are connected to long-term players in the market, such as Visa or MasterCard, anonymity is not 100% possible. The only way I can think of an 'anonymous' debit card are pre-paid/pre-loadable debit cards that you can buy at places like CVS. Their function, however, is more like a gift card and those tend to be inconvenient in the long run.”
Rautio pointed out that the main point behind these cards is not maximum privacy, but rather maximum convenience.
“I'd say the balance between anonymity - or privacy to certain extent - and convenience is providing personal information. Some people prefer convenience over anonymity, others prefer anonymity over convenience.
Xapo's goal is to bring bitcoin to the everyday life for people around the world. Our bet is this will happen only if we can make bitcoin accessible, easy to understand and "mainstream" enough so that large scale adoption of bitcoin can continue. Today this means that we've chosen to provide a highly convenient product over providing a more niche approach to anonymity.”
Another card used by Uber in Argentina, the SatoshiTango card also requires full financial identification. It is available in most countries, excepting the United States.
Matias Bari, CEO of SatoshiTango, explained that the usual identification requirements are still in place, though are less stringent than those required by banks.
Bari says to Cointelegraph:
“To open an account at SatoshiTango you need to verify your identity with a proof of ID and a proof of address. We need to apply the proper KYC and AML policies to comply with international regulations. You don’t need the same level of verification than bank account holders but you can’t request a prepaid card or even buy and sell Bitcoins without letting us know who you are.”
Another premier Bitcoin debit card by the company that gained fame for its ability to pay bills with Bitcoin, the Bitwala card is also not available in the United States. Notable, and unique, among all the cards mentioned here is Bitwala’s integration with the ShapeShift exchange, meaning that a customer could top up their debit card with cryptocurrencies other than Bitcoin.
Jeff Gallas of Bitwala explained that their card requires the usual forms of identification, and that all current Bitcoin debit cards likely require the same.
He says to Cointelegraph:
“To our knowledge, all Bitcoin debit cards on the market currently do require some sort of identification. For the Bitwala Bitcoin debit card (both physical and virtual), we're required to undergo certain AML/KYC requirements which include verification of the customers details.”
However, Gallas mentioned that, in the future, Bitwala may be able to provide solutions for those without the proper forms of government identification.
“We are working on offering a solution which is especially targeted at the so-called unbanked, who don't always have the required documents (e.g. because they don't actually own a proper piece of identification). This card could be obtained through providing only same basic details, but would be limited in its total transfer limits.”
Mainly a European card, CryptoPay’s Bitcoin debit card functions much in the same ways as others. It is also unavailable in the United States, and requires the same forms of identification for unlimited use.
George Basiladze, CryptoPay’s CEO, pointed out that all cards in the EU must comply with similar regulations:“All around Europe there are common KYC and AML requirements for issuing debit cards.”
Finally, Wirex, recently rebranded from E-Coin, offers a similar style of Bitcoin debit card as the others, along with an easily accessible app. This also means that unlimited cards must comply with the same identification regulations as the rest.
As previously mentioned, CryptoPay requires identification in order to unlock unlimited user. However, they do provide the option for an unverified card. This means that a customer does not need to provide financial regulation as long as they stay below a very low lifetime limit for the card.
Asked if Bitcoin debit cards could ever be private or anonymous, CryptoPay’s CEO George Basiladze added that privacy (and not divulging identifying documents) is an option for customers willing to deal with lower lifetime limits for a card.
“There are lower limits for unverified users (2500 Euros per lifetime) and higher limits for verified users.”
Basiladze also had strong words for any who would put on a pretense of providing a full-service Bitcoin debit card with no verification.
“In case a debit card provider offers full, unlimited and anonymous cards, this means that the operator either breaks the law or is lying, thus users should avoid it.”
Similar to CryptoPay, Wirex, in addition to providing full-service cards with identification, allows customers to continue unverified for a while.
When reached for comment, Dmitry and George of Wirex confirmed that it is possible for a Bitcoin debit card to be private/anonymous, provided that lower lifetime limits are considered acceptable.
They say to Cointelegraph:
“At the moment, it is technically possible for Bitcoin debit cards to be private or anonymous. As long as the client is happy with the low card limits, there is no requirement to provide any documents at all.”
Sadly, according to Dmitry and George, the world of completely private Bitcoin debit cards may very well end soon, forcing all customers under government identification regulations.
“Nonetheless, the regulation of the prepaid card industry is getting stricter. For example, the limits for unverified cardholders will be lowering soon. A number of reports try to establish links between prepaid cards and fraud/other illegal activities. Therefore, we do not expect anonymous debit cards in the near future, at least based on Visa/MasterCard platforms.”
On the extreme of the privacy spectrum is (was? used to be? was only imaginary?) BitPlastic. The company has a bare-bones website reminiscent of early e-commerce sites.
The lengthy FAQ promises full anonymity for all cards, but raises all kinds of red flags, including a one-time $3,500 non-refundable loading, zero refunds once shipped, zero possibility of transferring balance back from the card, zero recourse if a pin is lost, zero assistance if the card is lost, and a 5% chance that the card is either lost in the mail or seized by customs (in which case no refund will be possible).
When contacted for an interview via the site’s contact form, BitPlastic rejected the message rejected under security concerns. They were then emailed to the address given, which turned up undeliverable. Maybe perfect privacy with debit cards is a myth after all...
Even if no perfect solution exists for total privacy with convenience for Bitcoin debit cards, a workable compromise can be reached. A user wishing to maintain privacy can acquire an unverified card and either stay below the limit, or simply acquire multiple unverified cards, moving to a new one once the lifetime.
While this approach can be vastly inconvenient with heavy card use (possibly a new card per month or more), if major bills are handled separately, all expenses possible are paid directly in Bitcoin, and almost all other purchases are handled by either Bitcoin gift cards or cash, card use can be kept to a minimum. Using a Bitcoin debit card in this way, an unverified card may be able to last a year or possibly more.
Alternatively, certain customers may wish to have no lifetime limits on a card, but still desire greater privacy than usually offered by full verification. An alternative approach for those with two or more citizenships is to verify a card under one citizenship, and have it denominated in the currency of the country where the customer actually lives and works.
That can help keep financial activity visible to only the authorities with the least current dealings with the citizen, ensuring that no one party knows too much.
If you want to learn more about Bitcoin debit cards, read our previous article on this topic «6 Cards Battle for Bitcoin Supremacy, Bitcoin Debit Card Comparison Test».
Disclaimer: None of the above should be construed as legal advice. Please do your own due diligence in researching the applicable financial laws of your country.
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