Coinbase will allow people to put part of their paychecks in crypto

Investing consistently in cryptocurrency just got a lot easier. Robert Nickelsberg | Getty Images

The company said that the idea for the direct deposit came from users who said that making frequent transfers was inconvenient and time-consuming.

In September, Coinbase announced that its users will soon be able to set up direct deposit with any percentage of their paychecks and can choose for the money to be deposited as U.S. dollars or any of the more than 100 cryptocurrencies available at the exchange, with no fees.

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“With direct deposit, customers can more easily access our crypto-first financial services and be ready for any trade or purchase,” said Max Branzburg, vice president of product at Coinbase, in a Sept. 27 blog post. 

Direct deposit will start to roll out at the end of the month and continue through the end of the year, according to the company.

Benefit of direct deposits

“We’re entering the phase of cryptocurrency where there’s a demand for people who want to be paid in digital assets,” said Douglas Boneparth, certified financial planner and president of Bone Fide Wealth in New York. “This will obviously allow people to put more of their money more easily into cryptocurrencies, and right or wrong is really determined by user and their preferences when it comes to money.”

Essentially being paid in cryptocurrency — or receiving a portion of pay in the asset — makes sense for some people.

The direct deposit feature will help some investors treat cryptocurrency like a 401(k) plan, something that they’re consistently putting money into for a long-term investment. It especially makes sense for those looking to dollar-cost average, an investing strategy that puts smaller chunks of money into an asset over a longer period of time instead of all at once.

On the flipside, it will also be helpful for people who actively transact in cryptocurrencies, as they won’t have to make the extra step of depositing their money into their Coinbase accounts to make purchases or pay bills with the coins.

Where to be cautious

Owaki – Kulla | The Image Bank | Getty Images

Of course, converting your entire paycheck and being paid only in cryptocurrency could be risky, according to Boneparth.

“Obviously being paid in something that’s volatile … may be a dangerous thing,” he said.

In addition, if you’re new to investing in cryptocurrency, you should take the time to do research on the asset and decide if it makes sense for you before signing up for direct deposit, he said.

For example, if you get paid $2,000 in bitcoin and then the cryptocurrency loses 20%, your paycheck is now worth $1,600.

How much of each paycheck should you deposit?

“This is super-exciting,” he said. “But despite all the excitement, you have to be vigilant and knowledgeable.”

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