In this guide, we will cover all of the primary methods of cashing out cryptocurrencies for fiat money. The guide was co-authored by the team at Howtotoken and Pavel Salas, the CEO of Tokenbox. This article will be equally useful for those who are taking their first steps into the world of cryptocurrencies and to those who are more advanced and want to know more about cashing out the money raised through ICOs.
From our guide, you will learn all of the ways to cash out your crypto: cryptocurrency exchanges, peer-to-peer exchange services, Bitcoin ATMs, prepaid crypto debit cards, and how to use all these services. For those willing to carry out an ICO, we have a special section that covers how to register your company for an ICO and withdraw the money raised through it into cash.
Cryptocurrency exchanges are arguably the most popular method for cashing out crypto. You should be aware though that not all exchanges work with fiat currencies, so not all of them are suitable when cashing out.
The methods that are supported by the exchanges that work with fiat differ as well. The most convenient are the ones that allow users to transfer fiat money directly to their debit cards, such as Coinbase and GDAX, Kraken and CEX-IO.
We have named Coinbase’s GDAX as the best cryptocurrency exchange for beginners, by the way. You can consult our ultimate cryptocurrency exchange guide if you want to learn more about that. There are no special reputation rankings of cryptocurrency exchanges out there yet, so to find stable and secure exchanges besides this guide you can start by looking at the exchanges’ trade volumes on Coinmarketcap. The higher the volume, the more stable and secure the exchange is.
The exchanges take a commission for each transactions. Normally, it’s in the range between 0.15% and 0.2%. You should also keep in mind that cashing out crypto usually requires the verification of a user’s identity, and in most cases you will be asked to provide a scan of your ID. It’s a normal procedure, and it’s rather secure as long as you are working with a stable exchange such as Coinbase. If a platform won’t require ID verification from its users, then it is likely that banks will simply refuse to work with that platform.
[bctt tweet=”Cryptocurrency exchanges are arguably the most popular method for cashing out crypto”]
How to cash out your cryptocurrency this way:
- You need to register with the exchange platform that supports fiat and debit cards.
- Check whether they require ID verification for cashing out fiat. If yes, provide the proper documents. The verification process may take several days.
- Transfer the money from your wallet to the platform, exchange the necessary amount, and transfer it to your debit card.
Peer-to-peer Exchange Services
They serve as intermediaries between the buyers and sellers of cryptocurrencies and fiat money. Here you can agree to directly exchange cryptocurrency to fiat with other people. Depending on the amount you are exchanging, as well as personal circumstances, you can meet with the other “peer” in person and get money from them in cash or simply ask them to send you money to your bank card, electronic wallet such as PayPal, or even transfer it with Western Union. There are several methods to choose from. Here everything is possible.
P2P exchange services might be a good option if you need to exchange small sums of money. If not, it’s better to opt for secure and stable exchange services. The point is, if you transfer a lot of money through a bank transaction, it will be checked by your bank and they might ask you about the source of money. And exchanging lots of money in cash might be too risky, as you never know who exactly you will be meeting with during the exchange.
Another risk factor is that there is no way to know who the previous owners of the BTC were. If the BTC you gain through LocalBitcoins were used to pay for something illegal, you may later have a hard time explaining to the authorities that you have nothing to do with that as you won’t be able to prove how you got the BTC if you exchanged it for cash.
[bctt tweet=”If you want to keep your privacy and don’t want to leave any trace of transactions with fiat, a good option for you would be peer-to-peer exchange services”]
How to cash out cryptocurrency this way:
- Register with the platform.
- Look for the “peers” willing to exchange the necessary amount of fiat to crypto through this system.
- Connect with the “peer” and agree on the way you will make the transactions. Then do what you agreed upon (e.g. meet in person/get the fiat through a wire transfer, etc.).
Prepaid Bitcoin Debit Cards
Prepaid Bitcoin debit cards are simple debit cards, usually issued by Mastercard or Visa, that can be topped up with Bitcoin or other cryptocurrencies. The providers of such services are Monaco, Tenx, Bitwala, to only name a few.
This method has clear advantages: you can transfer crypto directly to a debit card and then make any transactions you could do with your regular card, or you could simply withdraw your fiat money from any ATM. The fees and structure of transactions are made clear as well. Besides, you can always reach the provider’s support line if you encounter any problems with your transaction. Another good thing is that some providers, such as Monaco, even offer cashback on any operation with cryptocurrencies – up to 2% in the case of Monaco.
The disadvantages, on the other hand, are that relevant services don’t exist in many countries and that you cannot top up debit cards with cryptocurrencies due to legal regulations in some regions. For example, Visa has banned topping up its cards with crypto in all European countries. So this method is convenient, but it will only suit you if these services are available in your country.
[bctt tweet=”You can transfer crypto directly to a Bitcoin debit card and then make any transactions with it, or simply withdraw your fiat money from any ATM”]
How to cash out cryptocurrency this way:
- Check whether the relevant services are available and legal in your country.
- If you find a service provider, just order a debit card from them, then top it up directly from your cryptocurrency wallet (or by any other supported means that is convenient for you).
These special cryptocurrency ATMs allow users to deposit fiat money and exchange them for Bitcoin and vice versa. This is quite convenient if you are lucky and live near a Bitcoin ATM (you can find out where they are on Coin ATM Radar), and if your country allows Bitcoin ATMs to withdrawal fiat money. For example, in Europe you can only buy Bitcoins with fiat through these ATMs, but you cannot withdraw fiat from them.
Another thing to keep in mind is that you might lose money if you make transactions through these ATMs as the current market rates are not updated on ATMs as fast as they are on exchange platforms. So due to the volatility of cryptocurrencies, ATMs might be not the best way to get your fiat money.
[bctt tweet=”Special cryptocurrency ATMs allow users to deposit fiat money and exchange them for Bitcoin and vice versa”]
How to cash out cryptocurrency this way:
- Check whether there is a Bitcoin ATM near you and whether or not you can withdraw fiat from there.
- Go to the ATM and get your cash, as simple as that.
How to Cash Out Money Raised through ICO
The most common way to cash out money from an ICO will depend on whether you raised the money as a private citizen or as a registered legal entity. In the first case, you will be able to cash out the money using any method listed above. But if that is indeed the case then the legality of the ICO itself is questionable.
The most common way at the moment to get your fiat currency is to legally register your company under the jurisdiction of Gibraltar and open a bank account for your company. That will cost you approximately 20-50 thousand dollars. The upside is that if your company is registered in Gibraltar, you will then have no problem withdrawing fiat money to your bank account directly from the trading platform where you run your ICO.
You can also register a company under a different jurisdiction, such as the Cayman Islands, and that would be cheaper, but you are likely to face legal problems when withdrawing money in this case.
[bctt tweet=”As an ICO, the best way to get your fiat currency is to legally register your company under the jurisdiction of Gibraltar and open a bank account for your company”]
Below is a step-by-step guide on how to legally register your company in Gibraltar, raise money through an ICO, and cash it out into fiat.
- First, you can consider applying to one of these three companies: Hassans, Octopus, or Aquarius. They carry out the registration of companies under the jurisdiction of Gibraltar. You can address them directly or through a lawyer. The good thing is that your actual location does not matter for this process.
- Representatives of the company you applied to will ask you to show them the white paper and your company’s business plan. When they look it over, they will be able to tell whether these documents are in compliance with actual legislation. After that, they will get an approval from a legal regulator and will then register the company in Gibraltar. You will be able to carry out anICO right after the registration is complete.
- During the ICO, the money will be transferred to the cryptocurrency wallets tied to your accounts. Concerning the wallets, you can use one of these: Ledger Nano, Trezor, Copay, or Electrum. We also advise that you open a bank account in the Turicum Bank of Gibraltar before the ICO is complete, as it will speed up the following procedures.
- When the ICO is complete, you will be able to open an account on any cryptocurrency exchange you prefer, and list the tokens there if you provide the platform with the bank account that you have in Turicum Bank.
- After that, you can exchange cryptocurrency into fiat through the exchange platform of you choice and transfer the money to your Turicum Bank account.
- You can transfer the money from your Turicum Bank account to any other bank account of your choice, under any jurisdiction.
If you are a private person, you can consider cashing out crypto through one of the many reputable exchange platforms like Coinbase. You will have to give up your anonymity this way in order to undergo ID verification, but there is nothing to worry about. It’s standard procedure and will not affect you in any way unless you use your cryptocurrency for something illegal.
In the case that anonymity is very important to you, you can exchange crypto for cash through the services such as LocalBitcoins, but as we noted before, that can be very risky. So it’s better to stick to cryptocurrency exchanges.
If you want to cash out the money you raised through an ICO, the most common way to do it efficiently and legally would be registering your company with Gibraltar, as we explained in the step-by-step guide above.
We hope that this guide was of use to you. Please feel free to share your opinion in the comment section below and stay tuned for more ultimate guides about the blockchain and other cryptocurrency-related topics!