8 Ways To Cash Out Your Bitcoin And Crypto In The UK

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How to cash out your Bitcoin for fiat money

A growing number of people dabbling in crypto, whether as a long term investment (hodling) or in an attempt to take advantage of volatility and turn a quick profit.

Either way, there’s going to come a point when you’ll want to crystallise your profits, or limit your losses, and sell some of your coins.

But how do you go about converting your crypto for cash?

> If you need help cashing out your crypto we can help. See our Advice Services page for more details.

Fortunately, it’s incredibly easy to cash out your crypto in the UK and sell your coins for fiat money.

How to cash out crypto UK

How you cash out your Bitcoin will largely depend on where it’s currently held.

Some people keep their crypto on centralised exchanges, such as Coinbase or Binance, while others secure their digital assets in a hardware wallet, such as a Ledger or Trezor.

All these platforms are available to people in the UK and enable you to convert your coins into cash which you can then transfer to your bank account.

How to cash out from Coinbase is a different process to selling your coins from a hardware wallet, but both are quite straight forward.

1. Selling your crypto on a centralised exchange

If your coins are stored on an exchange, selling them is a piece of cake.

Most of the mainstream exchanges offer an instant convert feature which enables you to turn your digital assets into pounds at the click of a button.

This is ideal for beginners as you don’t have to worry about navigating complex trading screens.

The fees you pay will be higher than carrying out what’s known as a ‘spot’ trade yourself, but it’s often worth paying the premium for a simplified service.

Assuming you’ve linked a bank account to your exchange account, you should be able to make a near instant withdrawal.

You’ll need to ensure you’re verified and have gone through the necessary AML/KYC checks to cash out your crypto on a centralised exchange like Coinbase.

But once this is done, moving the cash you generate from selling your crypto is like transferring money from one bank account to another.

2. Selling crypto through a decentralised or peer-to-peer exchange

Peer-to-peer (P2P) exchanges are decentralised platforms that connect you directly with buyers.

They’re known as DEXs, and are a form of digital marketplace that gives you access to pretty much any crypto you can think of.

Popular DEXs include:

• UniSwap
• SushiSwap
• PancakeSwap

DEXs often enable you to get a better price for your coins and give you a greater degree of anonymity as you don’t have to reveal any personal information to use them.

However, they’re more complicated to use and the interfaces can be daunting to start with.

There’s also an increased risk of hacking due to the fact that previously unknow vulnerabilities can be found in the DeFi (Decentralised Finance) protocols used to power DEX transactions, potentially resulting in the loss of your coins.

This isn’t to say that holding coins on centralised exchanges isn’t without some degree of risk as well, it’s just that DEXs can be more problematic, especially if you’re unsure about what you’re doing.

Some centralised exchanges, such as Binance, offer in-house P2P exchanges, allowing you to sell your coins in the marketplace while remaining on the main platform.

Binance holds the coins ordered in escrow until the funds are received by the respective party.

3. Swapping your crypto for another digital coin

If you’re looking to invest in another coin instead of cashing in you can use both centralised and decentralised platforms to swap your coins.

Centralised exchanges and DEXs enable you to seamlessly convert a crypto such as Bitcoin into another coin, such as Ethereum.

It’s easier to do on a centralised exchange as most offer an instant swap function, but you’ll pay more in fees, and you’ll be more limited in terms of the coins you can swap to.

DEXs give you access to a much larger spread of cryptos, but make sure you fully understand the crypto you’re swapping your existing coins to.

It’s relatively easy to start a cryptocurrency and bad actors often try to exploit the market by hyping a coin that has no utility then performing what’s known as a ‘rug pull’ which renders the coin worthless after they’ve stolen your funds.

4. Selling directly from your crypto hardware wallet

Selling your crypto from a hardware wallet is pretty straight forward these days.

Mainstream hardware wallets such as Ledger and Trezor allow you to sell your coins at the click of a button.

Trezor even has its own companion app, the Trezor Suite, which offers a perfectly usable level of functionality for straight forward crypto transactions.

From my experience, the drawbacks of selling crypto this way are:

• The fees are often quite high.
• Only a limited number of cryptos are supported.
• Getting your money to your bank account can be more tricky.

While keeping your coins on a hardware wallet is a great idea for a number of reasons, they’re sometimes not the most seamless way of selling them.

It’s often easier to transfer your coins from your hardware wallet to an exchange before selling them for cash.

5. Spending your crypto with a debit card

Another way of turning your crypto  into fiat money and using it in a practical way is to get yourself a crypto debit card.

Many of the large crypto exchanges and platforms offer their own Visa Cards which enable you to spend your digital currency across the globe, while offering generous cashback rewards.

Some of the platforms offering debit cards are:

• eToro
• Crypto.com
• Nexo

Nexo is a crypto lending platform that also enables you to earn interest on your coins. More about these later.

6. Spend your crypto like cash and earn the best cashback rewards

Crypto cashback is a growing trend, and many exchanges and platforms are getting in on the game.

Using a cashback app enables you to spend you crypto as you would fiat currency, while earn fresh coins for doing so.

Mode (now closed), for example, was a UK company that’s partnered with dozens of brands, including The Body Shop, Decathlon, Made, eBay and Hotels.com, to offer returns ranging from 3-6%.

The cashback is paid in crypto, but it’s easy to convert this to fiat through the basic exchange function of the Mode app.

Another popular UK cashback scheme is operated by CoinCorner, an Isle of Man based exchange.

It works in a similar way to Mode, and enables you to use your coins as you would cash, while earning rewards.

7. Using online payment and money transfer apps

Many of the world’s online payment apps now offer users access to some of the biggest cryptos.

PayPal, probably the best known of these, enables UK customers to buy and hold a handful of coins which you can then sell for cash directly through the app.

A lot of people will already have a PayPal account meaning it’s to sell your coins at the click of a button.

There are fees involved, but for the simplicity it’s worth paying a little extra if you don’t want to get bogged down in exchanges.

8. Cash out using a crypto ATM

There are a growing number of crypto ATMs popping up around the UK, especially in smaller convenience stores.

They enable users to both buy crypto and withdraw their crypto in the form of regular money.

They’re convenient to use but you’re likely to pay pretty hefty fees for the privilege – something to consider before you cash out your crypto using an ATM.

Alternatives to cashing out your crypto in the UK

If your motivation for cashing out your crypto is to put the cash in the bank to earn interest, why not earn crypto in interest instead?

There are several platforms available to UK crypto investors which allow you to earn impressive rates of interest on your coins.

These include:

• Nexo
• BlockFi (CLOSED)
• Lendingblock (CLOSED)

Nexo allows you to hold many different coins with varying rates of interest. On stablecoins, such as USDT (Tether) you can expect to earn about 10%, while coins such as Bitcoin pay about 4.5%.

Using a lending platform is a great way to make your coins work for you to earn a passive income on your crypto without having to cash out.

Things to consider before cashing out your crypto

Knowing when to crystallise your gains is a cornerstone of successful investing, but in the volatile world of crypto can have downsides as well.

As soon as you sell your coins you’re out of the game, meaning you won’t benefit from any future gains.

The same could be said for traditional stocks and shares investing, but with crypto the potential gains (and losses) can be much more significant.

You’re also closing the door on earning bank-busting returns on your coins which, combined with potential appreciation of the underlying asset, could grow into a significant amount over time.

Your crypto profits could also be significantly dented by the tax you’ll need to pay when you cash in – more on this later on.

You also need to consider the security of the platform you’re planning to use to cash out your Bitcoin.

Double check the URL to ensure you’re on the right website or app and take steps to ensure you’re not being scammed.

My ultimate guide to spotting a scam website or app will help.

What taxes do I need to pay when cashing out my crypto?

In the UK, how your crypto profits are treated by HMRC will depend on whether you’re deemed an investor or trader.

People who buy and sell crypto on a regular basis are considered traders and will need to pay both Income Tax and National Insurance on their gains.

Equally, if they’ve made a loss through their trading activities, this can be offset for tax purposes.

If you’re someone who’s bought and held a quantity of crypto (known as hodling) and seen its value rise over time, you’ll need to pay Capital Gains Tax (CGT) when you sell.

You get a tax-free personal allowance each year but any gains above this will be liable for CGT.

You can offset losses and there are a number of ways of reducing your CGT liability which I’ve written about in more detail. See how to reduce your Capital Gains Tax liability on crypto.

If you’re unsure about your tax liability there are a number of specialist crypto accountants in the UK that can help.

Remember, you’ll only need to worry about tax once you cash out your crypto.

Once this happens you’ll need to think carefully about what tax to pay and settle your bill with HMRC before going a on spending spree with your new found wealth!

Conclusion

From my experience the easiest route to cashing out your crypto is through a centralised exchange.

Big names like Coinbase have made it incredibly easy to move your crypto from coin to cash, or coin to coin if you want to keep crypto in your portfolio.

Different options will suit different people and their individual requirements, so you’ll need to decide what’s right for you.

Your technical ability and need for anonymity will play an important role in deciding how to crystallise your crypto profits.

Remember though that Bitcoin transactions are often never truly anonymous and that at some point you’ll need to use a bank account in order to use the cash that your crypto has generated.

If you want to use the cash generated by a crypto sale to buy property, stocks and shares and many other things you’ll need to declare the source of your income and have a watertight paper trail.

This will need to include transactions from 6-12 months prior to selling and show how you bought the crypto in the first place and all the transactions you’ve made since.

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