How do you turn cryptocurrency into cash?

by Noah Knowles · 12/27/2021

What you will discuss:

How Can You Cash Out Bitcoin and Cryptocurrency?
How Cashing Out Bitcoin Works on Different Exchanges
How Cashing Out Bitcoin Works Using a Peer-to-Peer Exchange
Paying Tax When Cashing Out Crypto

How Can You Cash Out Bitcoin and Cryptocurrency?

There are two main ways to convert Bitcoin into cash and eventually transfer it to a bank account. First, you can use a third-party stock broker. These third parties (including Bitcoin ATMs and debit cards) will exchange your Bitcoin for cash at a predetermined exchange rate. It is simple and safe. Or you are using peer-to-peer transactions to sell Bitcoin. This is a faster and more anonymous method because you sell Bitcoin directly to another person.

Third-Party Broker Exchanges

Third-party broker is another name for cryptocurrency exchange. The process is the same as when exchanging currency at an airport in another country/region. You deposit bitcoins on the exchange. Once the exchange receives your bitcoin, you can request a withdrawal in the currency of your choice. The withdrawal will be transferred to your bank account.

Brokers are subject to money laundering laws, so you need to withdraw funds to the same bank account you deposited.

Gekko Trading Bot Alternatives

PREVIEW

It is simple, easy and safe, but not the fastest way. The average time it takes for funds to reach your account is about 4-6 days, but this depends on the country. Any fees associated with this also depend on the country where your bank is located.

Bitcoin ATMs and Bitcoin debit cards work in the same way as third-party brokers. In both cases, you have created an account that allows you to sell bitcoins and withdraw cash. The biggest disadvantage is the high transaction costs.

Coinbase and Kraken are the most popular brokerage exchanges for buying and selling Bitcoin.

Peer-to-Peer Platforms

For a faster and more anonymous method, you can use a peer-to-peer platform to sell bitcoins for cash. By selling bitcoins to others, you can decide which payment method you want buyers to use. This usually allows faster transactions at lower fees. Compared with third-party brokers, individual buyers can usually get better exchange rates.

You can ask the buyer to deposit cash in your bank account or pay you via bank transfer (you can even use PayPal). Before handing over Bitcoin to them, be sure to ask for your ID and proof of payment.

If you know what you are doing, point-to-point sales are safe. However, it is important to watch out for scammers. It may be helpful to use a peer-to-peer platform that allows you to keep bitcoin locked until you confirm receipt of payment from the buyer.

How Cashing Out Bitcoin Works on Different Exchanges

If you follow the simple steps below, using Bitcoin brokerage is also very easy:

Decide which third-party brokerage exchange you want to use. Coinbase and Kraken are popular choices.
Register and complete the broker verification process.
Deposit (or buy) Bitcoin to your account.
Cash out bitcoins by depositing bitcoins into your bank account or PayPal account (applicable to some services).

Please note that the withdrawal time may be 4-6 days. Transaction fees may also apply.

Coinbase

Click Buy/Sell or click on the Coinbase mobile app in your web browser.
Choose to sell.
Choose the cryptocurrency you want to sell and enter the quantity.
Select Preview> Sell to complete this operation.

After the operation is completed, your money will be deposited into your wallet in local currency (for example, your U.S. dollar wallet). Please note that you can cash out your funds immediately by clicking “Withdraw Funds” in the Coinbase mobile app or “Withdraw Funds” in your web browser

Gemini

If you want to transfer your cryptocurrency to an external wallet or exchange, please go to the withdrawal page and follow the steps below:

Select a currency from the drop-down list.
Choose destination address (provided by your external wallet or exchange)
Enter the amount (please note the common withdrawal delays)
After checking the transfer details, select “Apply for withdrawal”.

If you use the Authy app for two-factor authentication (2FA), you can only withdraw funds when the transaction is approved in the Authy app within 4 minutes of the withdrawal request.

If you receive a two-step verification code via text message, you will receive a text message containing the two-step verification code to confirm the transaction.

Bitstamp

Create an account and buy or transfer Bitcoin to your account.
Access the market tab from your account. Choose the Bitcoin or cryptocurrency that you want to exchange for fiat currency. Choose a fiat currency pair for your cryptocurrency.
Click “Sell” and sell in fiat currency.
Go to the wallet and select the withdrawal currency. Enter the amount and bank account number, and click “Next”.
Review and confirm the review.

Commission: Depends on 30-day USD trading volume. It ranges from 0.50% of <$10,000 to 0% of >$20,000,000,000. These are transaction commissions.

For withdrawal fees, you pay 3.00 euros for SEPA withdrawals and 2.00 euros for faster payments. 0.1% (Minimum commission charged by international banks for each transaction = 25 USD/EUR/GBP. Withdrawal via ACH is free.

If you need further currency exchange, transaction tracking, modification, cancellation and other services, you may need to pay additional fees.

Bittrex

To withdraw coins, you need to generate an address using the wallet you intend to receive.

Log in to your Bittrex account and click “Reserve” on the bottom menu bar.
Click the withdrawal button and find the currency you want to withdraw in the search bar.
Enter the wallet address and the amount you want to withdraw. Make sure that the address you enter is created for the coin you want to withdraw. You cannot withdraw coins to different coin addresses. This means that BTC must be withdrawn as BTC, LTC as LTC, and so on. If you go to a different token address, you will face the risk of losing your funds forever. If you want to withdraw the entire balance, please press the MAX button.
After checking the wallet address and amount, click the “Next” button in the lower right corner.
Some coins may require information/payment ID/tag/memo. If necessary, you will be prompted to specify the message/payment ID/label/note to be displayed in the remarks field so that the coins can be sent to the recipient’s wallet. If you do not attach the ID/tag/memo, you risk losing these funds unless you are sure to send them to a wallet that does not require the message/payment ID/tag/memo. Check the deposit instructions of the receiving wallet for the coins you sent.
If the withdrawal does not require reminders, please move the slider next to the remarks field and confirm that the receiving wallet does not require reminders to route your deposit correctly before clicking Continue.
After confirming, press “Return” in the lower right corner.
After verifying your wallet address and memo (if applicable), confirm and delete
If you have enabled two-factor authentication (2FA), you will need to enter your 6-digit authenticator key. If you do not have 2FA, you will need to log in to your Bittrex account and set up a two-factor withdrawal from the mobile app.
After entering the verification code, click the blue arrow to confirm the transaction. Your withdrawal request has been successful.

How Cashing Out Bitcoin Works Using a Peer-to-Peer Exchange

PayPal

FAQ

What’s the nature of PayPal?

It’s the only financial market that runs 24/7, 365 days a year. Since all cryptos are global currencies without borders, prices change every minute of every day.

Are purchases protected when you check out with crypto?

Just like with other payment options, PayPal has your back with fraud protection and PayPal Purchase Protection on eligible purchases from millions of online stores where PayPal is accepted.

Are crypto transactions taxable?

Whenever you sell crypto, including when you check out with crypto, it’s a taxable transaction. Report any gains or losses on crypto sales come tax season. Don’t worry—we’ll provide the necessary 1099 forms when you sell cryptocurrency.

Cash App

You can send bitcoins to any Cashtag immediately from the Cash app for free.

Start sending or receiving Bitcoin:

Switch from USD to BTC by tapping “BTC” or “USD” on the main screen of the Cash app.
Enter at least $1 and tap “Pay” on the main screen.
Enter the recipient’s unique cash label, current phone number or email address.
Click “Pay”.

You can also send bitcoins from the bitcoin tab. for this:

Tap the Bitcoin tab on the main screen of the Cash app.
Click the “Aircraft” button.
Select “Send Bitcoin”.
Enter the amount and cash label of the payee.

You can also send bitcoins to individuals who currently do not have an account in the Cash app by entering their phone number or email address. They will be prompted to create an account to accept payment. If they do not create and verify their account within 14 days, the payment will be refunded to you.

The minimum transaction amount for Cashtag is 0.00001 BTC or 1000 satoshi.

Skrill

With Skrill, you first enter the cryptocurrency section you buy and sell. Skrill works with external cryptocurrency exchanges to convert your Bitcoin to your local currency. After the transaction is completed, you will be directed to the withdrawal section.

Click the withdrawal button, and then immediately withdraw money from your bank account. Then follow the prompts. You must withdraw at least $10 at a time. Most translations will be completed within two to five working days.

Paying Tax When Cashing Out Crypto

Cryptocurrency Taxation in the U.S.

If you sell cryptocurrency in the United States, the transaction may or may not be reported to the IRS. However, if you provided tax information when you created your account, it is assumed that your income will be reported to the IRS.

Even if your income is not reported, you must track and report your income on your tax return. There are many applications (mostly paid) that can help track every cryptocurrency transaction and generate accurate tax information.

Cryptocurrency Taxation Outside the U.S.

Outside the U.S., your transactions may or may not be reported to local authorities, depending on the regulations of your residence. Unfortunately, we cannot cover all countries/regions here, so please visit the website of your country’s tax authority for more information.