In today’s digital economy, mobile payment platforms like Venmo have evolved beyond splitting dinner bills. With over 70 million users in the U.S., Venmo — owned by PayPal — now allows its users to buy, sell, and hold four major cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH), with purchases starting as low as $1.
This move marks a significant step in bringing cryptocurrency into mainstream finance. For many beginners, Venmo offers a familiar, user-friendly interface to explore digital assets without navigating complex blockchain wallets or exchanges. However, while accessibility is a major plus, there are important trade-offs involving ownership, fees, and long-term investment safety.
Let’s dive into what you need to know about Venmo’s crypto features — from transaction costs and security concerns to future plans for wallet transfers.
How Venmo’s Crypto Service Works
Venmo partners with Paxos, a regulated financial services platform, to facilitate cryptocurrency transactions. When you buy crypto on Venmo, you're not receiving the actual digital asset in a personal wallet. Instead, Venmo holds the coins on your behalf — essentially issuing you an IOU.
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This model simplifies the experience for new users who may be intimidated by private keys or seed phrases. You don’t need to manage a public wallet address; just log in with your Venmo username and password. But this convenience comes at a cost: you don’t technically own the cryptocurrency, and you can’t send it to other wallets or use it for payments.
As Asheesh Birla, General Manager at Ripple, explained:
“It’s similar to when you deposit U.S. dollars with Bank of America. You’re trusting that Bank of America actually has your U.S. dollars in their bank accounts, and they’re giving you an IOU.”
Pros and Cons of Buying Crypto on Venmo
✅ Advantages
- Beginner-friendly interface: Ideal for those new to crypto who want a simple entry point.
- Low minimum investment: Start with just $1.
- Seamless integration: Buy crypto directly within the app you already use for payments.
- No need to manage keys: Eliminates the risk of losing access due to forgotten passwords or seed phrases.
- Real-time price tracking: Users can monitor market fluctuations and trade based on volatility.
❌ Limitations
- No true ownership: You cannot withdraw or transfer crypto to external wallets.
- Cannot spend crypto: Unlike platforms offering crypto debit cards, Venmo doesn’t allow purchases using digital assets.
- Double-sided fees: Charges apply both when buying and selling.
- Centralized control: Your assets are subject to Venmo’s policies, including potential account freezes.
Understanding Venmo’s Cryptocurrency Fees
One of the biggest drawbacks is Venmo’s fee structure. The platform charges:
- A 2.3% fee on all crypto transactions under $100
- A minimum fee of $0.50 per transaction
That means if you buy $10 worth of Bitcoin, you’ll pay $10.50 — $0.50 above the market rate. And when you sell, another $0.50 fee applies.
Here’s a real-world example:
Suppose you invest $10 in Bitcoin (total cost: $10.50). If Bitcoin rises 7.7%, your holding would be worth about $10.77. But after paying the $0.50 sell fee, you’d receive only $10.27 — still **$0.23 less than your initial outlay**.
This double-fee model makes short-term trading unprofitable unless price swings are substantial.
Security: Is Your Crypto Safe on Venmo?
Traditional cryptocurrency ownership revolves around decentralization and self-custody. With most wallets, you control your private keys — meaning only you can access your funds.
Venmo operates differently. Since it manages all wallet infrastructure, it falls under the category of a custodial wallet. While this reduces the risk of user error (like losing a seed phrase), it increases reliance on a centralized entity.
The crypto community often warns:
“Not your keys, not your coins.”
Additionally, PayPal — Venmo’s parent company — has a history of freezing accounts without warning. One user was locked out for 180 days after making just 10 crypto trades in a week, reportedly exceeding internal limits.
Until users gain the ability to transfer assets externally, storing large amounts of crypto on Venmo carries inherent risks.
Can You Transfer Crypto From Venmo to Another Wallet?
Currently, no. You cannot send cryptocurrency from your Venmo account to another Venmo user or an external wallet. This limits functionality compared to competitors like Cash App, which allows Bitcoin withdrawals.
However, there is hope for change. At the Consensus 2021 conference, PayPal executive Jose Fernandez da Ponte confirmed that third-party wallet transfers are planned, though no official timeline has been announced.
Regulatory hurdles play a role here. The U.S. Treasury has proposed stricter KYC (Know Your Customer) rules requiring exchanges to track identities linked to wallet transfers. These regulations may delay full interoperability.
In contrast, services like Revolut in Europe already allow cryptocurrency withdrawals — highlighting how quickly the landscape could evolve.
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Who Should Use Venmo for Crypto?
Venmo’s crypto feature is best suited for:
- Beginners testing the waters with small investments
- Casual traders interested in profiting from short-term price movements
- Users who prioritize simplicity over control
It’s not ideal for:
- Long-term holders seeking self-custody
- Investors planning to use crypto for payments
- Active traders needing low fees and withdrawal flexibility
Frequently Asked Questions (FAQ)
Q: Can I withdraw my cryptocurrency from Venmo?
A: Not currently. You cannot transfer crypto to external wallets or other users. Withdrawal functionality may come in the future.
Q: Does Venmo charge fees for buying and selling crypto?
A: Yes. Venmo charges a 2.3% fee (minimum $0.50) on both purchases and sales.
Q: Do I actually own the crypto I buy on Venmo?
A: No. Venmo holds the assets on your behalf. You receive an IOU rather than direct ownership.
Q: Is it safe to store crypto on Venmo long-term?
A: It depends on your risk tolerance. Custodial wallets carry counterparty risk. For long-term storage, consider moving funds to a private wallet once transfers are enabled.
Q: Which cryptocurrencies are available on Venmo?
A: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).
Q: Can I use crypto on Venmo to make purchases?
A: No. Despite holding digital assets, you cannot spend them directly through the app.
Final Thoughts: Should You Buy Crypto on Venmo?
Venmo lowers the barrier to entry for cryptocurrency adoption — making it easy for millions of users to start investing with minimal friction. Its seamless UX and integration into daily finance tools are strong advantages.
But high fees, lack of ownership, and limited functionality make it unsuitable as a primary investment vehicle.
For those just starting out, Venmo can serve as a learning tool. But as your portfolio grows, consider migrating to a platform that offers true ownership, lower fees, and wallet interoperability.
Whether Venmo becomes a gateway or a dead end depends on its future support for transfers and decentralized access. Until then, treat it as a convenient — but limited — stepping stone into the world of crypto.