This article will go through the various options you have when it comes to “cashing out” your cryptocurrency. By this of course we mean exchange your Bitcoin or Ethereum or other crypto into a fiat currency such as the US dollar or Euro. Unfortunately, doing this is not always straightforward and as many who have gone in and out of cryptocurrency before can attest, it can be a pretty stressful process. This is especially true if you’ve made some impressive gains and are rushing to get your money out before the price of the asset you invested in drops. So, let’s start with that part!
Suppose you’ve just finished a crazy cryptocurrency trade. Maybe you got word of some hot altcoin that suddenly partnered with a tech giant like Google or Microsoft and were able to accumulate just before the price went to the moon. Maybe you just decided to HODL your Bitcoin and you are reading this on the day that it finally hits 100k or 1 million or whatever crazy amount. You’ve 10x+’d your money. You are literally shaking with excitement and want to get your hands on that cash ASAP.
The first thing you need to do is calm down.
Haste makes waste and this applies the most to cryptocurrency. If you make a single mistake in the wallet address, then your crypto is gone forever. Do not be that guy/girl. Ideally, you would have had an exit plan set up beforehand. If not, that’s okay. If you currently have your cryptocurrency on your wallet and you are about to send it to an exchange to trade, make sure you check that the exchange is operational without issues, specifically the cryptocurrency you are trading or planning on withdrawing.
Unfortunately, there are many cryptocurrency exchanges out there that like to “run maintenance” on withdrawals whenever cryptocurrencies like Bitcoin see significant price gains or losses. While you will probably not encounter this issue on more reputable exchanges such as Binance, Kraken, and Bitstamp, many others including the legendary Coinbase have a pretty bad track record when it comes to technical issues during bull runs or shakeouts. Now on to the third thing to keep in mind.
Cryptocurrency taxes vary around the world, with some countries having a 0% tax and others treating it just like any other income (aka a lot of tax). While going through the list of every country and what their current tax code is for cryptocurrency is outside of the scope of this article, as a general rule of thumb most governments don’t care about your crypto until you convert it into fiat currency and send it to your bank.
Therefore, depending on where you are, how much you make, and what time of year it is, you might want to consider converting your cryptocurrency into a trustworthy stablecoin like USDC or even a regulated issuer of tokenized precious metals such as Paxos’ Pax Gold. Having your money in digital US dollars or digital gold will help keep your asset stable while you figure out any tax details and implications. Assuming you opt for the tokenized precious metals, this will also help you hedge against inflation and most market volatility. Both are also easy to store on most digital and hardware wallets.
Now that you are more or less organized, it’s time go through a list of reputable exchanges and services that will allow you to withdraw your cryptocurrency once you are ready. Note that it’s a good idea to remember that it’s best to move your profits once the price volatility has died down or at least the price of the asset is still on the rise. This is because cryptocurrencies like Bitcoin can take hours to transfer when the network is busy. During that time, the price could drop by a significant amount. The worst thing in the world would be to watch all of your gains go to waste while you wait for your withdrawal to process.
Without further ado, let’s get into it!
Cashing out of cryptocurrency using stablecoins and tokenized precious metals.
Companies such as Circle (which make USDC) and Paxos (Paxos Standard and Pax Gold) will let you withdraw your stable coins or tokenized gold directly through their website. This is extremely convenient and because of that they tack on quite a large amount of fees to do it. For example, you must pay 0.2 Pax Gold to turn it into fiat to send to your bank. At the time of writing, that is hundreds of dollars.
As it so happens, other similar services such as Uphold have the same convenience/high fee combination. Uphold lets you turn your Bitcoin, Ethereum, XRP, and about a dozen other cryptocurrencies into Gold, Silver, Palladium, or 27 different fiat currencies including US dollars, Euros, and British pounds. You can then transfer these funds directly to your bank via wire transfer. Although their fee schedule is quite reasonable on the surface, in practice the exchange rates they offer are quite poor compared to most alternatives.
Cashing out of cryptocurrency using exchanges
While almost every single cryptocurrency exchange in existence will let you buy cryptocurrency using a credit card, debit card, or even by bank transfer, going in the opposite direction is reserved for a select few. This is primarily because of regulations surrounding money. If a cryptocurrency exchange also provides crypto-fiat gateways, in many jurisdictions this changes their designation as a business, meaning they would have to comply with a whole buffet of regulations which may simply not be worth the time or money to deal with.
The advantage of using exchanges to withdraw your crypto into fiat is that you don’t have to worry about moving your cryptocurrency to another third-party provider. While you should never keep your cryptocurrency on an exchange for a long period of time, when you’ve just finished executing an epic trade you won’t have to go very far to get that money into your bank. If you are looking to cash out your cryptocurrency using an exchange, you have four options.
The first is Bitstamp, a European cryptocurrency exchange based in Luxembourg.
The second is Coinbase, the famous American cryptocurrency exchange which is also owned by Circle. Coinbase has had technical issues in the past so keep that in mind if you are moving your cryptocurrency on Coinbase when the market is hot.
The third option is Gemini. Also based in the United States, Gemini is widely known for doing things by the book. They have one the best track records of any exchange in existence and it’s twin founders, Tyler and Cameron Winklevoss, are very active in the cryptocurrency community.
Your fourth option is California based exchange Kraken, another very well known name in the crypto sphere. All 4 exchanges allow you to trade your crypto for a variety of fiat currencies which can then be wired to the international bank account of your choice. Remember that this can take a few days!
Cashing out of cryptocurrency using specialized platforms
If you aren’t a fan of exchanges or don’t use them, there are a few other alternatives you can consider. One of the best known alternatives is LocalBitcoins. This website allows you to buy and sell cryptocurrencies without an exchange with locals in your area. You can agree to payment terms and conditions in advance, meaning you can buy and sell the cryptocurrency using virtually any medium including PayPal and even cash. Note that this can occasionally be risky.
If you are Canadian, you have access to what is perhaps the best option for cashing out your cryptocurrency. Shakepay is an app which lets you buy and sell Bitcoin and Ethereum for Canadian dollars. The fees are incredibly low, the platform is very simple, and once you’re done making the transaction you can e-transfer the money to your Canadian bank account and have it within minutes. It’s really a shame that there aren’t more providers like this around the world!
Like Shakepay, Piixpay provides a simple an intuitive platform to convert your cryptocurrency into fiat. Based in Estonia, they let you exchange over 80 cryptocurrencies for Euros which you can then wire to your bank account. They are a member of the Estonia Chamber of Commerce and Industry and are a super hot up-and-comping fiat-crypto, crypto-fiat company.
Austrian based Bitpanda may be ring a bell for many of you. They are one of the frequent sponsors of the popular cryptocurrency YouTube channel, DataDash. While they may not let you convert as many cryptocurrencies into fiat compared to Piixpay, they do offer many more cash-out options on the fiat side, supporting other currencies besides the Euro. They also offer a whole suite of services including saving, precious metals investment, and even an academy where you can learn more about cryptocurrency!