Like buying and trading cryptocurrencies isn’t complicated enough, now cashing in your digital currency has become a tedious process. You jumped through all the hoops, and finally made some decent amount of money, but the road doesn’t end there. In order to prevent Bitcoin laundering, especially large amounts, regulators have put in place several steps you need to go through before seeing any cash on your bank account. Here are a few legit ways on how to convert your digital currency into paper money.
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Withdrawal Limits
From brokers to an average person just buying Bitcoin, everyone has a maximum daily withdrawal limit. These restrictions vary by large, from several hundred to several thousand. Exceeding your daily limit can put you in a position where you’re not going to be able to withdraw any more cash at all. So, before you proceed any further make sure that you know exactly how much you’re allowed to take out.
Frozen accounts
When you deposit large amounts of money, the vast majority of banks will ask you to explain the origin of the money. These policies were established to prevent money laundering. Be aware that in some countries an income from cryptocurrencies is not deemed as a legit way to earn money. So, you need to get your story straight before depositing any cash on the account. Bank teller is going to go into an itsy-bitsy detail, asking the same questions over and over again, therefore you need to have a believable narrative ready explaining the revenue deposited.
Pay Taxes
There are no two ways about this – taxes have to be paid. Whether you have a small or large amount of money, every transaction is subject to taxation. When it comes to earnings from cryptocurrencies specifically, the greater the earnings the more taxes you have to pay. The best thing would be to talk to your lawyer and see if there’s any way to wiggle your way out of this, or at least to lower the taxes a bit.
Fees
With every withdrawal of cryptocurrencies, there’s a fee attached. Sometimes exchanges will reduce the commissions paid if the amount of the digital money withdrawn is large – think hundreds of thousands of dollars. Therefore, it would be wise to take out one lump sum rather than withdrawing small amounts several times.
Common Ways to Convert Cryptocurrency to Cash
There are three usual ways of how large amounts of digital money are sold – through the exchange, trading with OTC (over the counter) broker, and peer-to-peer. Let’s take a closer look at each one.
1. Crypto Exchanges
Probably the most popular way to buy and sell cryptocurrency for fiat money is through the exchange. A little digression – fiat money is the real paper currency that is backed up by some collateral, usually gold. Cryptocurrencies have no real value, so to make it legit, governments stepped in to provide guarantees for it. Putting large amounts of Bitcoin on the market may cause its price to dwindle, and can lead to major losses. On the ways of how you can trade Bitcoin in the crypto-world visit allin1bitcoins.com. Now, exchanges are used extensively to convert digital funds, but they proved to have their own flaws. First of all, exchange rates vary immensely, each platform has its own rules, and sometimes they are not able to give large payouts. One of the most commonly used exchanges are Coinbase, Coinmama, Bitstamp, Kraken, and Cex.io. Here’s a short description of how each one operates.
- Coinbase has a maximum daily withdrawal of $10,000 for individuals with a fee of 1.49% on bank account transfers. For corporations, maximum daily limit is $50,000.
- Coinmama operates in more than 150 countries and has three levels of verification in order to withdraw the money. Level One has the lowest limit of $15,000 daily, while on Level Three this limit goes up to 1 million dollars. The transaction fee is a bit higher at 5.9%.
- Bitstamp has no limit on the withdrawals making it especially suitable for large cash-outs. It also has a low fee of 0.09%.
- Kraken also has three different withdrawal limits for various types of accounts. There are three: starter, intermediate, and pro. Payouts are available only for intermediate and pro, and they are $100,000 and $10 million, respectively.
- io has been around since 2013 and it’s one of the oldest and most respected exchanges available. However, daily limits are one of the lowest ones on the market with a daily limit set at $1000 and a monthly limit of only $3000.
2. OTC Brokers
This is one of the simplest and most common ways to cash-out big bucks from cryptocurrencies. OTC brokers act as middlemen between the buyer and the seller. The seller is usually the one to contact the broker after which he tries to find a buyer on the market. The OTC broker is obliged not to make the details of the transaction public, so none of the information is ever disclosed. The broker’s job is finished once the seller and the buyer start negotiating the details of the sale. This is a convenient way to convert crypt to fiat money since there are no withdrawal limits. Big corporations prefer this type of dealing mostly because it gives them the level of anonymity that’s oftentimes crucial for the company’s survival on the exchange. Furthermore, OTC Brokers are familiar with the international rules, regulations, and laws of almost every country cryptocurrency operates in. However, you should always double-check tax laws with a local attorney, since this is the most sensitive issue in many regions.
3. Peer-to-peer Transactions
This basically means that you sell your crypto to someone you trust. If you know a person that you fully trust, then the transaction is simple. It’s not only private, but there is no limit to how much you can sell. It’s super convenient, but it can be risky too if neither one of you is familiar with the government regulations and bank policies.
As you can see, it’s not simple, but it’s not exactly rocket science either. The most important thing is to be very well-informed before jumping into converting cryptocurrency. Some ways are more secure, but they also come with daily limits, fees, and commissions. Others are limitless, like peer-to-peer, but they have their drawbacks too, like trust issues. In any way, making an informed decision is going to lower your chances of being a strip of your cash. Besides that, you should be careful with pages promoting famous bitcoin billionaires. You can check out a full story behind Gordon Ramsay Bitcoin gossips (or scam) on this page – gordonramsaybitcoin.com.
Boris is a staff writer at TheFrisky.