MetaMask Card tax implications

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By Nick Waytula, Head of Tax at Crypto Tax Calculator

Disclaimer

MetaMask doesn’t provide tax advice. This article represents our stance on guidance received to date, which may continue to evolve and change. None of this should be considered as advice or an individualized recommendation, but it’s important to us that our users have relevant information available to them in the most accessible way possible. Please consult a local tax professional regarding your own tax circumstances.

When you use MetaMask Card to make a purchase, MetaMask automatically converts your chosen crypto asset into fiat to complete the payment. In return, you are rewarded with USDC cashback.

Generally, in the UK, the US, the EEA, Brazil, Colombia, Argentina, Mexico, and other jurisdictions where the MetaMask card operates, spending crypto on goods and services is a taxable event, which means you may need to report it on your tax return. Here’s what that means:

• Any time you spend crypto on your MetaMask Card, you’re technically selling it
• You must calculate a gain or loss based on the difference between the acquisition cost and the fair market value at the time of transaction (proceeds)
• Using a stablecoin for a purchase does not typically result in a material gain or loss

Depending on which cryptocurrency you choose to spend when you make purchases with MetaMask Card, it may have a significant effect on your tax outcome. Using USDC, USDT, or other stablecoins are generally more favorable than facilitating purchases with other cryptocurrencies. The following scenarios illustrate a MetaMask Card transaction using either USDC (a stablecoin) or wETH. Please note: not all assets mentioned may be available in your region.

Local regulations

It's important to check with a tax professional in your jurisdiction for local laws and regulations, as this guide provides general information, and is not financial advice.

Using a stablecoin

1. I purchase 3,000 USDC for $3,000.
2. I use my MetaMask Card to purchase a TV worth $3,000.
3. At the time of the transaction, 1 USDC is worth $1. Therefore, I used 3,000 USDC to purchase the TV.
4. MetaMask automatically converts my USDC to fiat.
5. I report the sale of 3,000 USDC on my tax return.
   1. Cost basis = $3,000
   2. Proceeds = $3,000
   3. Gain = $0
   4. USDC cashback (3% using the Metal Card) = $90
6. When I file my tax return I must report the transaction to my local tax office. Because the stablecoin transaction does not result in a gain, there is no tax liability on the sale of USDC.
7. The tax treatment of the USDC rewards varies, so consulting a tax professional is advisable.

Using wETH

1. I purchased 1 wETH for $2,000.
2. I use my MetaMask card to purchase a TV worth $3,000.
3. At the time of the transaction, 1 wETH is worth $3,000. Therefore, I used 1 wETH to purchase the TV
4. MetaMask automatically converts my wETH to fiat.
5. I recognize a gain of $1,000 on the sale of 1 wETH to buy my TV.
   1. Cost basis = $2,000
   2. Proceeds = $3,000
   3. Gain = $1,000
   4. Cash back (3%) = $90
6. When I file my tax return, I must report $1,000 of gain for this sale of wETH.
7. The tax treatment of the USDC rewards varies, so consulting a tax professional is advisable.

CTC’s US crypto tax guide

CTC’s UK crypto tax guide

ALL CTC crypto tax guides

The information provided in this article is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Crypto Tax Calculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human, computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.