I'm in the US and I'd like to purchase a few coins that are not available in Coinbase. I was thinking about transferring some crypto from Coinbase to Kraken and then trading the transferred crypto for the ones I would like to buy. Is this a viable plan? How can I minimize any fees that might result from this process? Or should I just fund my Kraken account with fiat instead?
Posted May 13, 2021, 9:03 PM UTC
Couple things:
you should be able to see what the fees will be before making the transfer
do a test transfer for a small amount before sending large balances
Crypto to crypto swaps are taxable events in the US so you will have taxes due on any gains you made on the pre-swap crypto
I used USDC. Coinbase doesn't charge fees for the purchase and since it's a stablecoin you won't trigger a taxable event. XLM as mentioned below might be slightly cheaper to send but if the price goes up you could trigger a taxable event and if it goes down it will likely cost more than the transaction did.
My wife has a Coinbase and I have Kraken. We transfer stuff all the time
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How?
I mean funding your Kraken account with fiat is the most direct way. But many will do this using a low transaction fee coin such as XLM.
Covert crypto to Lumens, transfer to new exchange, covert back to the crypto you want—simple.
It's a very viable plan! That's what many do. I am a fan of XLM for it's super cheap fees. Trade for a stable coin then trade again for your coin of interest!
Once I send the XLM to Kraken would I need to exchange it for BTC and then BTC for the desired coin? I don't see a route to go directly from XLM to the desired coin.
I would go for Tether personally. But if your coin can be traded for BTC then by all means. I think you have more fees with BTC though, but I could be mistaken.
The best approach is to use USDT, great advice.
You can just sell it too. Unless the coin you're after isn't paired with USD.
And you got the right idea here. A shitload of us do this to keep our bank/credit/debit info off of multiple exchanges. Its a great way to minimize theft risk and only have to onload fiat on one exchange.
Another tip I'd offer would be to look into gemini if you think you might be buying coins not listed elsewhere often - they have 10 free withdrawals per month, further cutting down on fees.
Thanks to everyone! I appreciate the answers. I think I get it now.
I am interested in doing this. Any guidance you can provide will be appropriated.