Converting your crypto to fiat currency – US dollars, Euros, Japanese Yen and other “normal” money – is often frustratingly complex. Thankfully, there are exchanges and brokers who accept crypto and send fiat to your bank account, plus emerging services that make using your digital funds much easier. Here’s a look at some of the best.
Table of Contents
- Cashing Out with an Exchange
- Cashing Out with Direct Sales and Brokers
- Use Other Emerging Options
- Dealing with the Establishment
- Dealing with Tax Issues
Cashing Out with an Exchange
For traders and investors, exchanges are the most familiar interface between fiat and digital assets. All digital exchanges accept crypto deposits, simply by sending to your assigned exchange wallet address. However, the exchanges that allow fiat withdrawals only support the most popular coins, so you may need to convert your altcoins and tokens before you can transfer them for withdrawal.
Perhaps the best-known crypto exchange in the world, Coinbase leads in fiat currency management. The site operates in over 30 countries, is fully regulated and allows verified US users to withdraw fiat currency (USD) direct to their linked bank accounts.
Coinbase supports Bitcoin, Litecoin, Ethereum and Bitcoin Cash.
Once you’ve connected a bank account to your exchange account, withdrawing fiat is as simple as clicking. Note that fiat withdrawals are not currently available in Wyoming, Hawaii, or Minnesota due to state regulations.
Image from Coinbase.com
Gemini was the world’s first licensed ether exchange. The site has a more limited reach, operating primarily in the US and exclusively in dollars for fiat currency. US users can link their personal bank account to withdraw funds directly. Gemini offers both ACH (3-4 days) and wire transfer (same day) withdrawals.
Gemini supports Bitcoin and Ethereum.
Once you’ve linked your personal bank account – business accounts are not permitted – you can withdraw with a click. Joint bank accounts work with Gemini, though it’s easier if you add your account partner to your exchange account as an administrator.
Based in Luxembourg, Bitstamp offers withdrawals to business banking accounts, making it a popular choice for large-volume professional crypto traders. Like Gemini, Bitstamp offers US dollar and Euro fiat transfers.
Bitstamp supports Bitcoin, Litecoin, Ethereum, Ripple and Bitcoin Cash.
US customers can withdraw in fiat by wire transfer. However, the site has faced criticism over the level of compliance it requires, especially when reaching high-volume balance thresholds. If you’re comfortable handing over a lot of information, Bitstamp is an excellent choice for corporate crypto users.
Cashing Out with Direct Sales and Brokers
For users who acquire crypto from non-exchange sources – faucets, donations, gifts, brokers, and so on – or who wish to avoid the verification procedures enforced by the big exchanges, direct sales sites and brokers are an alternative way to convert crypto to fiat.
Based in Finland, LocalBitcoins is perhaps the best-known site for private, direct crypto-to-fiat transactions worldwide. It’s a semi-anonymous service that focuses on simplicity and privacy, offering in-person, local exchanges of crypto assets and online transfers backed by on-site escrow. The site displays the number of transactions, feedback scores and response times for every user, for safer decisions.
LocalBitcoins uses Bitcoin as its base currency and focuses on fiat transactions, but supports Litecoin, Ethereum, Dash, Monero, and Ripple exchanges. To convert altcoins to fiat, you must first sell them for bitcoins, then sell the bitcoins for fiat.
LocalBitcoins transactions are person-to-person. List the amount of crypto you’re selling, your upper and lower volume limits, and your price. Choose a payment method – including in person, bank transfer, online payment processors, or even cash by mail – and put your crypto into the site’s escrow.
There’s on-site messaging for direct communication with your buyer, who has 30 minutes to provide your money if you’re working with online or bank transactions. When you receive your fiat payment, you release your coins to your buyer from escrow. There’s mediation if things go wrong.
Note that LocalBitcoins is not available in New York because of Bitlicense regulations.
Paxful’s mission is to be a “universal money exchanger.” The site’s not as attractive or user-friendly as LocalBitcoins, but it offers over 300 ways to convert bitcoins to fiat (and other cryptocurrencies) including bank transfers, cash, and exchanges for gift cards. Paxful uses on-site escrow to improve trading safety.
Paxful uses Bitcoin as its base currency, but some traders create offers in Litecoin, Ethereum, Monero, Ripple, Dogecoin, Bitcoin Cash, Bitcoin Gold, Digibyte, Dash and other cryptocurrencies. To convert altcoins to fiat, you must first convert them to bitcoins.
As a seller, create a listing for your crypto by choosing Sell Bitcoin. Enter how much you wish to sell (there’s a minimum of 0.0001 BTC) and choose your desired fiat currency, then pick a payment method from the very long list. You may find it easier to browse the list of available sales to figure out which payment method suits you, rather than scroll through the list!
Cash Out with Bitquick
Bitquick is another peer-to-peer marketplace for buying and selling Bitcoin. The site offers private transactions (which are virtually anonymous for buyers) with on-site escrow and manual verification of buyer payments.
Bitquick only supports Bitcoin.
The site streamlines the crypto-to-fiat conversion process by offering only three payment methods. You can receive fiat for your bitcoins as a cash deposit to a bank, a cash deposit to a CO-OP credit union, or by Western Union or Moneygram transfer. To sell, you only need to enter how much crypto you’re offering, your minimum price, whether you want a static or dynamic price (which can come from one of three exchanges and can be adjusted by your desired percentage) and where to send the money.
Despite its name, Bitquick is potentially slower than the other direct sale sites because of the manual purchase verification process, which takes around three hours on average.
Use Other Emerging Options
As Bitcoin leads crypto into the mainstream, a variety of innovative digital-to-fiat solutions is beginning to appear. While many have limited flexibility or availability, they’re paving the way for widespread adoption and simpler ways to cash out your assets.
Cash Out with Prepaid Cards
Two decades ago, the prepaid debit card market made money management simpler. Now, prepaid cards aim to do the same for Bitcoin and other major cryptocurrencies.
Prepaid crypto cards work the same as prepaid debit cards: you “load” them with an amount of fiat money – bought with crypto – then use them like any bank debit card. Instead of removing funds from your bank account, they pay by reducing the amount “loaded” on the card.
Despite Visa shutting down the three biggest European prepaid crypto cards in January 2018, making finding a provider whose card is widely accepted more difficult, the prepaid card market continues to grow. Fuelled by the accelerating acceptance of crypto as a form of currency, cards like BitPay – issued by Metropolitan Commercial Bank – are supported in all 50 states.
Cash Out with Bitcoin ATMs
One of the most exciting innovations in crypto is the Bitcoin ATM – not just because these crypto-converting machines make cashing out so easy, but because they spread awareness and acceptance. There are over 1,600 Bitcoin ATMs in the US and hundreds more worldwide.
Image from localcoinatm.com
Bitcoin ATMs are, more accurately, crypto ATMs. And they’re not just cash-dispensing machines that accept funds from your crypto wallets and give you fiat in exchange.
- They allow you to buy and sell crypto and fiat.
- Some machines support over 50 cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Dash, Dogecoin, Bitcoin Cash, Monero, and Zcash.
- They work with software and hardware wallets.
- They allow you to send and receive cash payments to and from people in other countries by using public crypto wallet addresses.
With multiple manufacturers, franchising options, a growing number of accepted cryptocurrencies, and mobile apps to help you locate the nearest machine, Bitcoin ATMs promise to significantly improve access to crypto and ease of cashing out.
Cash Out with Private Banks
You’re unlikely to want to use a private bank until you achieve “whale” status – you’re trading or holding millions of dollars in crypto – but the situation is an excellent example of compliance difficulties. It’s also a good way of foreseeing what might become necessary for government and retail banking compliance, if the regulators come down heavy on crypto in the future.
Private banks employ compliance officers to ensure their clients are paying taxes, earned their million legitimately, and will not cause political, economic, or social problems for the bank.
The difficulty with crypto is that it’s very hard to convince compliance officers that you made piles of cash from invisible coins with very few records. If you’re a trader, it’s relatively easy – the exchanges all have trading histories and the regulated exchanges tie your history to your KYC verification details – but for someone who was an early adopter, a serious miner, or a very long-term holder, producing records is a real challenge.
The short version is that you should keep records of everything. If you don’t already have them, start making them. Log into your wallets and create a small transaction or sign a message to prove ownership. Take screenshots. Print receipts. Don’t let your exchange accounts lapse. Treat your crypto like your fiat to maintain clarity, transparency, and the ability to prove you earned your millions legitimately.
Dealing with the Establishment
One of the biggest problems with being successful in crypto is that the regulatory landscape is such a mess. Every country and every state has its own legislation, its own regulations, and its own quirks.
If you’re serious about crypto and are dealing in large sums, you’ll have to address tax issues. If you’re hoping to bank in crypto or open an account at a private bank (who will almost certainly want to know how you acquired your funds), you’ll have to handle documentation and the way they still give you a sideways look when you mention crypto!
Dealing with Tax Issues
The tax laws change constantly and your responsibilities will change depending on what country you live in. In the US, they depend on what state you live and bank in, too.
In most countries – including the US – cashing out your crypto is a “taxable event.” The US considers crypto to be property (for the moment), so cashing out is like selling property: you’re liable for short- or long-term capital gains tax, depending on how long you held the asset. You’ll pay less tax if you’ve held your cryptocurrency for at least a year.
That means you must keep records of any crypto acquisitions, too, including trades, donations, gifts, faucets, earnings, and so on. The Cryptocurrency Fairness in Taxation Act (CFTA) is currently being debated by Congress. If it’s accepted and put into law, transactions below $600 will become tax-exempt.
Regardless of where you live, your best bet is to find an accountant or tax preparer who is experienced with crypto (and can prove it).