The cryptocurrency industry is hitting new milestones, finally surpassing the $1 trillion market cap. Ethereum’s price recently went over its all-time-high and Bitcoin has already doubled in value since it peaked in 2017.
For investors, the wait has finally paid off. Many view this as the perfect period to take well-deserved profits and want to learn how to cash out cryptocurrency. For this reason, we decided to write an article that gives you all the best options on cashing out crypto safely and quickly.
To that goal, we explain some important factors you should be acquainted with prior to selling your crypto, as well as the benefits of converting crypto to FIAT. Then, we will list the methods of how to cash out cryptocurrency together with their pros and cons. Finally, we touch upon some best practices to keep your funds out of reach of hackers and scammers.
Factors to consider when you cash out cryptocurrency
Let’s suppose you just realized an extraordinary altcoin trade and made good profits on your favorite exchange. Or you’ve been holding and accumulating Bitcoin for years, and now its value is 10x of your initial investment.
So, you’ve decided to convert some of those profits into FIAT money. But before you cash out, there are some very important factors that you need to consider, such as:
The reliability of the platform
Regardless of the type of platform you’ve chosen to cash out your crypto, you should always verify their reliability. There are multiple ways to enquire about this:
Check out Trustpilot for user experiences and the overall reputation of the platform.
Read opinions on independent sources such as subreddits or tech forums.
Make sure the exchange is easy to use, the verification process is hurdle-free and the transactions are quickly executed.
It usually doesn’t cost anything to deposit funds on an exchange. After all, these platforms want you to trade your crypto so they can charge trading fees for their service.
On the other hand, cashing out your crypto is almost always subject to some form of withdrawal fee. Make a habit of comparing exchanges to see which ones offer the most advantageous rates to minimize the financial impact on your profits.
Examine the process in detail
Ensure you understand the terms of service and the entire process of withdrawing your crypto. For example, lots of exchanges do not require any form of ID for depositing funds. However, when you want to cash out, there might be a withdrawal limit or KYC procedure involved.
Always read through the fine print before engaging in a crypto withdrawal to avoid unpleasant surprises mid-process.
Legality in your country
While cryptocurrencies are getting increasingly popular, not all countries see them as beneficial to their internal economy. Make sure you are aware of your region’s regulations on cryptocurrencies before undertaking a significant cryptocurrency transfer.
This is to avoid the possibility of incurring a fine or getting your bank account blocked by the government for suspicious behavior.
Local currency availability
There’s a chance that your preferred exchange doesn’t support your local FIAT currency. In this case, contact your bank to inform yourself about receiving foreign currencies to your account and the exchange rates that apply.
Sometimes, you might have to open a foreign currency account before you can proceed.
Tax-wise, cryptocurrencies remain largely unregulated or function in a grey zone. Most fiscal agencies won’t care about your cryptocurrency until the moment you convert them into FIAT and send them to your bank. That being said, many counties already require investors to pay taxes on crypto profits.
So, ensure you are keeping track of your transactions to remain on the right side of the rules. For more details on how to prepare for crypto taxes, you can check out the following links:
Advantages of cashing out your crypto
In the cryptocurrency market, HODLing is a great strategy for making money. However, cashing out cryptocurrencies at the right time can also have some benefits, such as:
Diversifying your portfolio - you can reinvest your profits in other markets such as commodities, stocks, or bonds. Diversifying will help you spread your funds and eliminate your financial dependency on the performance of a single market.
Limiting the volatility of the market - the crypto market can be unpredictable. Sometimes, the best solution is to secure your profits by converting them into stablecoins. This way you can wait out the erratic market movements without having to exit the ecosystem.
Using it to buy more Bitcoin - for experienced traders, detecting short-term price dips is a perfect opportunity for “Stacking Sats”. If you are able to detect the tops (sell) and bottoms (buy), you will be able to accumulate more Bitcoin in the long run.
Enjoying your profits - investing and trading can be fun, but it’s equally stressful. Enjoying the fruits of your labor and having the risks you’ve taken pay off can be extremely gratifying.
Before you begin
Before you choose your method of cashing out, an essential step in this process is to create your own cryptocurrency wallet.
What is a cryptocurrency wallet?
Cryptocurrencies are digital assets and don’t exist in any physical shape or form. They are representations of data on the blockchain, and can be accessed by a pair of keys - a private key to spend them and a public address to receive them.
These keys are safely stored using specialized software solutions called cryptocurrency wallets. There are a few different types of wallets, which serve different purposes:
Mobile wallets - smartphone apps that let you access your crypto on the go.
Desktop wallets - software programs that encrypt your keys on your PC and turn your computer into your very own crypto safe.
Hardware wallets - USB-like devices that use military-grade encryption hardware to safeguard your keys.
Paper wallets - pieces of paper with your key information printed out on them.
The video below shows you how to create your Exodus mobile wallet. This type of wallet should cover most of your needs when starting out.
Why it’s important to create your cryptocurrency wallet
Most crypto exchanges will allow you to buy and deposit funds using your credit, debit card, or bank transfer. However, sometimes it might be difficult to send your funds in the opposite direction. This is because some regional regulations on crypto withdrawals don’t allow exchanges to provide crypto to FIAT services globally.
A wallet will allow you to withdraw your cryptocurrencies in their original form so you can search for an alternative method to cash them out. In addition, using a private wallet offers the following benefits:
Have complete control over your funds.
Isolate you from hackers who target cryptocurrency exchanges.
Best methods of cashing out cryptocurrency for 2021
Now that you are aware of some crucial elements that can influence how to cash out cryptocurrencies, let’s get started.
Transfer crypto to FIAT from a trading platform
Some of the biggest trading platforms such as Coinbase, Binance, and Kraken offer the option to transfer your crypto directly to your bank account, in FIAT value. When available, this is often the preferred cashout method of many traders, as it involves minimal third-party involvement.
Usually, they provide a good variety of FIAT currencies to choose from, minimizing the impact of the exchange rates in your local currency. Some even allow you to store FIAT funds on the exchange, while you wait for a better entry into the market.
However, keep in mind that this method is often accompanied by extensive KYC verifications. Additionally, withdrawal limits can often be on the lower side when compared to their crypto counterparts.
How to withdraw your crypto to FIAT from an exchange
Find the crypto to FIAT option on your exchange. It is usually situated in the withdrawal section of your exchange wallet.
Make sure the exchange covers your region with this service.
Choose your preferred local currency and provide your banking details.
Cash-out cryptocurrency from a DEX or crypto-to-crypto exchange
Some trading platforms prefer to avoid the hassle of complying with hundreds of different regional regulations for FIAT conversions and offer only crypto-to-crypto trading.
This is also true for decentralized exchanges (DEX), which allow peer-to-peer trading with the help of smart contracts. By design, they are unable to offer crypto-to-FIAT trading pairs.
How to cash out cryptocurrency when using a Decentralized (DEX) or crypto-to-crypto exchange
If you are using this type of exchange, you have two options to cash out cryptocurrency:
Sell your Bitcoin or altcoins for stablecoins. Most exchanges provide a wide variety of stablecoins such as USDT, GUSD, USDC, which are pegged to the value of the US dollar. Converting into these coins will allow you to exit the volatility of the crypto market while still remaining in the ecosystem.
Use a brokerage exchange. If your final goal is to convert your crypto into cash, the best solution is to transfer your coins to your personal wallet and use a brokerage exchange such as Safecurrency. Let’s see how this works.
Cash-out cryptocurrency with Safecurrency exchange
Safecurrency is a brokerage exchange that facilitates the exchange of crypto to FIAT and vice-versa. The exchange is compliant with EU and US regulations, providing a safe way to exchange your crypto.
Why choose Safecurrency
Because its goal is to provide a simple service, the Safecurrency exchange is extremely easy to use. In comparison, trading platforms have so many options available that newcomers can quickly become overwhelmed by the complexity of their dashboards. Safecurrency answers this issue with a simplistic interface that gets the job done, quickly.
In addition to its beginner-friendly interface, Safecurrency also offers a streamlined ID verification process. Today, exchanges are required to collect their customers’ data to comply with existing regulations. This process can be often tedious and lengthy, with document verification requiring a couple of days to be completed.
With Safecurrency, the entire process takes less than 10 minutes to complete from start to finish! Documents are verified within minutes and your user account will be authorized to cash out cryptocurrency in no time.
And finally, in case you find the process more difficult than expected, you can contact the support team via the live chat function on the website. Any question or issue you might have will get resolved promptly.
As for cryptocurrencies, Safecurrency supports VISA, Master Card, and SEPA transfers for the following coins:
Bitcoin Cash (BCH)
Below is a guide that details the entire exchange process on the platform.
How to cash out crypto with Safecurrency step-by-step guide
Once you have transferred your cryptocurrencies to your personal wallet, make sure you have the following items on hand before you begin:
Your smartphone - for the 2FA SMS verification of your account.
Some ID documents - to confirm your ID.
Your Banking details - to provide a destination for your FIAT funds.
Step 1: Register a Safecurrency and go through the KYC procedure.
Type in your personal information and click on the “Create Account” button to proceed (1).
Verify your email address by clicking on the “Verify email” button to confirm (2) in the email Safecurrency sent to your inbox.
Enter the SMS verification code to confirm your phone number (3).
Provide clear pictures of a government-issued ID document of your choice (4).
Take a selfie with your phone or webcam and wait for the system to process the data (5).
If the information you provided is correct, your account should be verified within minutes. You will then be allowed to proceed with your first transaction (6).
Step 2 - Begin your first transaction on Safecurrency
Log into your verified user account and click on “New order” (1).
Select the cryptocurrency you wish to sell (here BTC) and type in the desired amount (2).
Select the local FIAT currency in which you wish to receive your funds (3).
Select one of the proposed receiving methods, e.g. “Card” (4).
Enter the public address of your crypto wallet (5) and click on “Continue” to proceed (6).
Step 3 - Finalize your payment
Back in your dashboard, locate the transaction you just initiated and click on “Pay” to proceed (7).
Type in the card number where you want your funds to be transferred (8) and complete the transaction by clicking “Continue”. Keep in mind that this card must be issued in your name.
Once the payment has been verified, your funds will be sent to the destination of your choice. That’s it! The only thing left for you to do is to wait for your funds to arrive.
Use a Crypto ATM
Bitcoin ATMs are the best option for those who wish to convert their cryptocurrency into hard cash immediately.
Crypto ATMs require minimal verification (often just a phone number) and are the fastest way to convert your crypto to cash. However, they also charge much higher fees when compared to most other methods depicted in this article.
There are around 15.000 of these ATMs spread around the world, and you can locate them by using the CoinATMradar website. In addition to their location, the website will also inform you which cryptocurrencies these ATMs support and whether you can sell your crypto there.