If you’re new to the cryptocurrency scene and not sure where to start, buying bitcoin can be intimidating. But don’t be disheartened, even the experienced bitcoin buyer will need support and guidance.
Summary of Minnesota Cryptocurrency Market:
- Buying and Selling bitcoin is legal in Minnesota
- Buying bitcoin can be conducted via approved and State licensed cryptocurrency exchanges
- Licensed exchanges must abide by the Minnesota Monetary Transmission Act.
In this guide, we outline how to use cryptocurrency exchanges in Minnesota, what steps to take after signing up and how to move your bitcoin to a secure wallet. We also include other buying methods such as at bitcoin ATMs, outline the tax requirements and legality.
We hope you enjoy this guide on how to buy bitcoin in Minnesota.
Top 5 Minnesota Bitcoin Exchanges
Overview of Minnesota Bitcoin Exchanges
When buying bitcoin, there are a few things you’ll need before getting started. First, you’ll want to sign up for an account on a cryptocurrency exchange. There are a variety of these online platforms that allow users from around the world to buy bitcoin with different payment methods. In fact, Coinbase – one of our recommended exchanges – offers several ways to buy and sell bitcoin including bank transfer, credit card and debit card purchases. Signing up is easy, requiring little more than your name and email address; most only require verification if you want to withdrawal/spend larger amounts of money. Once verified, funds can be added using your linked bank account or by transferring in existing bitcoins from another wallet.
But which online exchange should you choose? We outline the attributes that should be considered when selecting an exchange.
🔒 Safety and Security
Cryptocurrencies are digital assets that can be easily stolen in large amounts if the appropriate safety and security measures are not in place. During the early days, you may have heard of the infamous Mt. Gox incident with millions of dollars worth of bitcoin hacked.
Nowadays, cryptocurrency exchanges have improved their defenses greatly. But this doesn’t mean that all exchanges are full proof. In addition, it’s not only the exchange that needs to have the proper safeguards, but you too must have the controls in place.
Don’t fall for get rich quick bitcoin schemes, be alert to scams that are continually being devised, don’t be tricked by fake celebrity endorsements, and store your access codes and passwords safely and securely.
The best exchanges have their own insurance policies, provide you with 2-Factor-Authentication, the ability to ensure approved IP addresses can be used, and provide Customer Support for suspicious activity.
📞 Customer Support
Customer Support not only encompasses whenever you have a question, but they are proactively informing you of platform changes, suspicious activity, helping you navigate through compliance requirements such as KYC and achieving your bitcoin goals.
Good exchanges will also have useful self help centers, guides and knowledge base that you can draw upon.
A professional exchange Customer Support can go a long way with protecting your bitcoin and achieving good returns.
💳 Payment Methods
After creating an account with an exchange, you will need to make a deposit. The options of depositing are important because they will vary in speed, limits and cost. Payment methods can include wire transfers, ACH, credit card (Visa or Mastercard), debit card, PayPal, GooglePay and ApplePay.
Limits will apply to some methods, and merchant fees may also be incurred.
Be alert to the fees for different types of payment methods, and the business days need to make a deposit or withdrawal.
🪙 Cryptocurrency Selection
The number of supported currencies for each exchange will vary. The differ because some exchanges do not want the overhead of offer a cryptocurrency that is thinly traded and has no liquidity. As a result, if you are wanting to divest from bitcoin and include an obscure cryptocurrency in your portfolio you may need to select from a particular exchange only. There is added convenience with choosing an exchange with a large range of supported cryptocurrencies, but it very much depends on your investment strategy.
In addition to cryptocurrency selection, some exchanges do NOT accept fiat currency. For beginner who want to deposit US dollar to buy bitcoin, you will need to avoid the crypt to crypto exchanges, and select a fiat accepting one.
🏷 Coupons and Discounts
Most cryptocurrency exchanges use discounts and coupon codes to market themselves and cater attention of more and more traders. They convince traders to sign up to their platforms and enjoy significant reductions at the time of making transactions. In addition some also offer discounts when they refer a friend or make a specific amount of credit in the account.
Be careful when receiving emails touting great discounts or rewards when signing up. Often marketing of these incentives are pushed through email and various social media outlets. Do NOT subscribe or sign up to any of these marketing schemes. They are more often than not scams.
💰 Fees
Every exchange charges their users differently. This makes comparing exchanges extremely difficult when simply looking at their fees. There is no standardization, but the most common method of fee calculation is via taking a small percentage of the amount traded.
Usually, the commission is less than 1% per transaction, but reduces if trading volumes significantly increase. Also, be aware that deposits and withdrawals may also incur fees. These aren’t imposed upon by the exchange, but rather the payment provider. The exchange, however, may seek to pass on these fees to the user.
⚙️ Platform Reliability
A platforms reliability is relevant when trading frequently. For bitcoin buyers who are looking to buy and hold, the reliability of a platform may not be as important as an experienced day trader, yet it still should be considered. The global and larger market capital cryptocurrency exchanges tend to have better platforms. And can manage downtime and maintenance better. New and unproven exchanges can be risky to sign up and use, particularly if the platform has a lot of complex functionality.
Platform reliability also instills confidence in security controls. An exchange that is often down, is indicative of weak control and may be suspectible to hacks.
📈 Liquidity
Without good liquidity it is hard to be able to sell, liquidate the earnings (or losses). It is important to have liquidity, if not then it could become a problem. Liquidity comes and goes. This is the same for any tradeable asset, like stocks. Trading in stock volumes increase and decrease seasonal and also broadly in alignment with how well the economy is performing.
A low volume exchange has risks that are two fold. One, you will need to bide your time in order to sell for the right price. Low volumes will make this difficult, and especially if you urgently need to sell this could cause you to lose some of your profits. Secondly, a low volume exchange is prone to market maniuplation. The larger holders of the coin, could possible move the market, but it more than likely causes volume voliatity on the exchange.
Setting Up an Account
To buy bitcoin from an exchange, you will need to set up an account. The process varies slightly between each of the exchange platforms, but ultimately you will need to go through a KYC (Know-Your-Client) process.
A KYC process is a mandatory requirement by all licensed exchanges in Minnesota. They need to perform this verification, to prevent money laundering and to meet AML (Anti-Money Laundering) international regulations.
The KYC will normally ask for your person details, proof of identity in the form of utility bills, drivers license or passport and social security number. Some exchanges may ask for more information.
Once your KYC has been processed your account will be activated. Now send whatever amount of money into it that matches how much fiat currency you’re willing to spend on bitcoin.
Send your US dollars through a payment method such as a bank transfer and then sit back and wait until it arrives in your exchange wallet — which could take several days depending on how busy they are.
Minnesota Bitcoin Exchange Reviews
Minnesota has numerous exchanges available. We review the most popular cryptocurrency exchanges in alphabetical order.
Binance.US
Some US States have restricted Binance.US, but not for Minnesota. Binance.US is the lowest fee exchange coupled with high liquidity. This combination is a compelling reason to sign up to Binance.US if you are intending to open a personal account. If you are intending to open a business account that is for a company, trust or other complex structure, beaware that you may be faced with an onerous KYC process. Business accounts need more documentation to establish source of funds and ultimate owners, and it is widely known that Binance.US has a poor customer service record to help you navigate through this process. Some customers have waited over a month, with constant follow up with Binance.US to find out the status of their account application.
Aside from the potential poor experience with opening a business account, the rest of Binance.US is really good. Leveraging from the IT platform from Binance (International), Binance.US is able to provide rich features for both novice and expert. The selection of cryptocurrencies isn’t in the hundreds, but then again it’s not small either and would suit most buyers. There are some buyers who do want to diversify into more exotic coins that aren’t available on Binance.US, but you will find that all other exchanges will not be able to cater for the needs of everyone.
Binance.US is safe and secure. There is no doubt about it. Without going into all the detail, Binance.US has been under the most scruitiny of all exchanges for compliance and regulation. Being under the spot light, they have left no stone unturned to create the safest of environments. However, this does NOT dilute the individual responsibilities of users. No matter how good any platform controls are, if a user discloses their passwords, user ids and other personal details, there is nothing a platform can do to prevent fraudulent withdrawals.
Binance.US has a download mobile app for both Android and iOS, plus a downloadable desktop app. All apps provide more than enough features for trading, but the desktop version offers better analytics.
Overall Binance.US is a platform that you can’t go wrong with. Though you may not be able to open a business account quickly, it’s worth a try.
- Money Transmitter License: MN-MT-1906829
- Cryptocurrencies: 64
- Mobile App: iOS and Android
- Fees: 0.1% – 0.5%
- Payment Methods: Debit Card, ACH, Wire Transfer
BlockFi
BlockFi has only recently come to market with an exchange platform from its origins of being a depositor and lender. There’s not to the platform at the moment, with only one payment method and limited coins. Trading volume and liquidity is small.
If you are looking beyond simply buying bitcoin, but also depositing and borrowing then consider BlockFi. But if looking to just buy and hold, or even to trade daily consider other exchanges first. BlockFi may mature further, but for the moment only join BlockFi for deposit and lending bitcoin.
- Money Transmitter License: MN-MT-1873137
- Payment Methods: ACH
- Mobile App: iOS and Android
- Fees: embedded in the spread
CEX.IO
CEX.IO is global decentralized exchange that originated from the UK. Established in 2013, it has a good history of being a safe and secure bitcoin exchange. It’s platform has powerful analytics that would suit experienced investors. For the beginners, the layout may at first appear confusing, but it’s not difficult to be accustomed to it.
With over 4 million customers, CEX.IO is valued at over $43 billion. In the US, the exchange is highly liquid. Trading fees are reasonable, not the best, but their customer support more than makes up for it.
CEX.IO is an exchange that ranks as one of the best alongside Binance.US, Coinbase and CEX.IO.
- Money Transmitter License: MN-MT-180417
- Cryptocurrencies: 100+
- Mobile App: iOS and Android
- Fees: 0.15% – 0.25% + deposit and withdrawal fees
- Payment Methods: Debit Card, Credit Card, ACH, Wire Transfer
Coinbase
Referred to as the top Bitcoin broker (BTC), Coinbase has always been the preference of beginners to try out their luck by investing in cryptocurrencies. Due to its simple user-interface and easy to handle mechanism, this cryptocurrency exchange has emerged as the best platform for all Bitcoin and other cryptocurrency fans. They can carry out transactions with SEPA transfer, bank transfer, debit/credit card. with the surety of buying highly liquid cryptos. The best part is that if any trader wants to buy cryptocurrencies urgently, he/she can do it through Instant Buy with a debit card.
- Money Transmitter License: MN-MT-1163082
- Cryptocurrencies: 96
- Mobile App: iOS and Android
- Fees: 0.5% – 4.5%
- Payment Methods: Debit Card, Credit Card, ACH, Wire Transfer
Coinmama
Coinmama is the next worthwhile cryptocurrency exchange that works for its clients effortlessly. The best part is that it is available for everyone across the globe, which means that people from anywhere can easily invest or transact in digital currencies. Its transaction fees depend upon the volume of purchase; however, money can be paid through SEPA transfer at a lower fee. Another thing that makes Coinmama a good option is the highest limitation for dealing in bitcoins, especially while using credit cards. The exchange has proved itself a reliable and professional platform where traders can invest their money with ease.
- Money Transmitter License: Unknown
- Cryptocurrencies: 96
- Mobile App: iOS and Android
- Fees: 0.5% – 4.5%
- Payment Methods: Debit Card, Credit Card, ACH, Wire Transfer
Crypto.com (CDC)
Crypto.com is becoming one of the biggest exchanges in Minnesota. It has enlisted a couple of well known celebrities to broaden its market share – Matt Damon and LeBron James. In addition it has purchased the naming rights of L.A. largest sports arena, previously known as the Staples arena. It’s marketing doesn’t stop there, with user of Crypto.com being offered a metal card instead of a plastic card for daily use. The metal card is impressive in appearance, and does get people talking. But in terms of functionality, it’s exactly the same as any other debit and credit card.
The Crypto.com platform is one of the more reliable to use. The app works effortlessly on mobile devices, with some users joking that bugs are easily fixed with uninstall and re-install (other exchanges are a lot worse and cannot even be resolved). Users of Cryto.com also benefit with earning the native coin (CRO) of the platform. The more user that join, the more potential value the native coin has. Scale is everything in the cryptocurrency market, and certainly Crypto.com is trying to achieve that quickly.
Trading fees are low. It is almost equal to Binance.US and Coinbase, with the lowest fees. Customer Service can be a bit hit and miss. Most users are happy with the support that is available, but some aren’t happy with the lack of support for opening up a business account.
- Money Transmitter License: Unknown
- Cryptocurrencies: 250+
- Mobile App: iOS and Android
- Fees: 0.5% – 4.5%
- Payment Methods: Debit Card, Credit Card, ACH, Wire Transfer
eToro – Unavailable
* Update – eToro is currently not available in Minnesota
eToro has a lengthy history of operating in the exchange market. Its beginnings were as a foreign currency exchange, which lends as a good leaping board to acting as a cryptocurrency exchange. Their trading fees of zero is misleading, which arguably does not give the perception of an exchange that you can trust. Although trading fees are zero, eToro hurts you with the wide spreads. By widening the spreads, transparency of fees is appalling lacking. How much “true” trading fees is very difficult to determine.
The platform, as you would expect, is rich with analystic, functions and powerful. Experience traders enjoy the eToro platform with strategies that can be implemented by using other financial products. The mobile app is simple to use, and is great for new and experienced buyers of bitcoin.
- Money Transmitter License: Not Licensed – Unavailable
- Cryptocurrencies: 27
- Mobile App: iOS and Android
- Fees: zero (but huge spreads making eToro more expensive than Binance.US and Coinbase).
- Payment Methods: Wire, ACH, PayPal, e-wallets
FTX.US
FTX.US is one of the newest bitcoin exchanges to enter the US market, and it is offering very low trading fees. It is so competitive that it ranks along side Binance.US and Coinbase. If you are considering selecting an exchange on fees alone, then FTX.US will be the one for you.
Cryptocurrencies are limited to only 20, which isn’t a lot when compared to the CEX.IO which has hundreds. Liquidity is lower than the other big exchanges, because it’s relatively new and is still building up its base. But liquidity is quickly improving as it captures more of the US market. NFL GOAT Tom Brady is the ambassador and shareholder of the exchange, lending support to make FTX.US a household name in Minnesota.
Choose FTX.US if you are looking for value for money when buying bitcoin.
- Money Transmitter License: MN-MT-1957771
- Cryptocurrencies: 20
- Mobile App: iOS and Android
- Fees: 0.4% – 5.0%
- Payment Methods: Wire, ACH, PayPal, e-wallets
Bitcoin ATMs
With the help of Bitcoin ATM, it’s quite easy for potential investors to buy bitcoins whenever they have enough funds available. They make the process so quick and easy that traders used to wonder whether things have been done properly or not. It is worth mentioning that Bitcoin ATMs charge between 5% to 10% fees against providing privacy, security and convenience of keeping personal and other details in private. This fee is literally worth the features traders will be getting.
LocalBitcoins.Com – Peer to Peer Exchange
Known for providing an escrow service, this cryptocurrency platform enables clients to find the right buyers for their Bitcoins. Although advertisement is a good option to go with, many have not received the required level of responses. The thing that makes LocalBitcoins different from others is the in-person meeting, which is facilitated and secured by LocalBitcoins have turned out to the fastest platform to acquire Bitcoins within a few minutes.
Minnesota Cryptocurrency Tax Ruling and Rates
Bitcoin and other cryptocurrencies is a taxable asset in the eyes of the IRS. Therefore when you buy and sell bitcoin, you will need to calculate how much tax is payable. Tax is dependent on the outcome of realizing capital gains or losses. The tax rates differ between short term and long term, which is defined by one year. Short term realized gains have tax rates that are in alignment with personal income tax rates. While long term realized gains have an average of 20% (but may differ depending on your circumstances).
Be prepared to submit to the IRS details of your trading activity. Most exchanges will provide tax reports which will help with the IRS submission.
Bitcoin Cryptocurrency Laws and Legislation
2016 – Minnesota has ambiguous laws governing the use of bitcoin and cryptocurrencies. Though there has been intiatives to develop further the application of blockchain and digitial currencies, the Minnesota Money Transmitter Act currently does not include “virtual currencies” or even its “monetary value” as part of its definition. In addition, no guidance has been issued with the Minnesota Commerce Department.
2017 – the House of Representatives attempted to the amend the Minnesota Unclaimed Property Act to include virtual currency as propert through HB1608. However, this bill failed to be approved.
The Money Transmitter Act has been amended to include the defintion of virtual currencies and monetary value. Subsequently, the amendment resulted in the Minnesota Department of Commerce establishing a licensing and regulatory framework for cryptocurrency exchanges.
Guidance has been issued by the Department of Commerce, with instruction on the licensing application process.
Futher detail are found here.
Bitcoin and Cryptocurrency Wallets
Some exchanges also offer wallets. It’s not necessary for a good exchange to offer a wallet to their clients, though it can be a nice to have for new investors. However, be aware that online wallets offered by exchanges are normally hot wallets. That is, these wallets are connected permanently to the internet. This can be quite risky to use a wallet that is controlled by the exchange and not by yourself.
Hence it’s not necessarily a good thing if an exchange offers a wallet, but it’s a nice to have, if you are looking for an exchange with their own wallet.
- Online Wallets: Every crypto-exchange has their own wallet where traders can store their coins or cryptocurrencies for as long as they want. However, there are two types of these wallets that traders have to decide about which wallet they want to use for their trading.
- Minnesota Hot Wallets: Since the inception of bitcoins and other cryptocurrencies, wallets have been transformed and divided into two forms- desktop and online. Digital wallets are free and can hold any cryptocurrency that traders want. They enable them to get easy access to their cryptocurrencies via mobile devices. They are perfect for beginners who want something easy to start with.
- Minnesota Cold Wallets: These specifically designed devices work as physical cryptocurrency storage that allow traders to bring their cryptos with them, no matter where they are going. Though, the only considerable thing is their expensive nature with limitations of storing certain cryptocurrencies for future use.
Minimum Legal Age
Minnesota and Federal Law requires buyers and sellers at bitcoin exchanges to be at least 18 years old.
Summary
In Minnesota you will find various ways to buy bitcoin. The most common is via cryptocurrency exchanges. The vast majority of cryptocurrency exchanges are licensed by the Department of Commerce and Financial Institutions. A cryptocurrency exchange that you select to buy bitcoin should fit your investment strategy. A good balance of fees, safety and security, platform reliability, liquidity, supported cryptocurrencies and payment methods is often sought after.
In addition to buying on a cryptocurrency exchange, bitcoin can be bought at ATMs, through the exchange of goods and services or mining.
After purchasing bitcoin, a wallet is needed to store it. The keys to the wallet are vital in keeping safe. There are different types of wallets, each with their pro’s and con’s that should be considered.
Finally, when using bitcoin there are tax implications. The IRS treats using bitcoin the same as foreign currency. If you profit from bitcoin, you may need to pay taxes.
How to Lodge a Cryptocurrency Customer Complaint
If you have a customer complaint at a cryptocurrency exchange, please raise the issue with them first.
If unresolved, please contact the Department of Commerce and Financial Institutions.
Minnesota Department of Commerce and Financial Institutions
Division 85
7th Place East Suite 500
St. Paul, MN 55101
https://mn.gov/commerce/consumers/file-a-complaint/complaints/
