How Do I Cash Out and Sell My Bitcoin and Crypto For Fiat?

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Crypto investing can be a fickle business with people both accumulating coins and selling their holdings all the time.

Often this is in response to price movements, or it may simply be the case that they need the money.

> If you need technical help cashing out your crypto (or buying more)The Crypto Adviser can help. See our Advice Services page for more details.

Whatever the reason, you may be wondering how to actually sell your cryptocurrency stash and what’s the quickest way to turn your coins into cash?

If you’ve decided to stop being a HOLDer and buy your Lambo then here’s what you need to do to quickly convert your crypto into cash.

What’s the best way to convert my crypto and Bitcoin into cash?

One of the easiest ways to sell you cryptocurrency is to use one of the major exchanges.

You may already have your coins sitting on a crypto exchange such as Coinbase, Binance or KuCoin in which case converting them into cash is a piece of cake.

Firstly, you need to sell your crypto on the exchange.

You can do this by choosing either a market order, where you take the automatically chosen current ‘market’ value for your coins, or you can set a limit order whereby you dictate the price you want to get.

A market order is quicker, but you might pay slightly more in fees, whereas a limit order is slower, especially if you’re expecting a higher price, but the transaction is often cheaper.

Exchanges like Coinbase offer a quick sell feature whereby you can avoid the complexities of trading screens and setting orders and simply click ‘sell’ to get your cash.

Remember, crypto prices can be volatile and the exchange rate you get will be shifting all the time.

Exchanges generally quote an asset price and settlement value for a limited time. If you don’t sell within this window you’ll have to update the trade to get a new quote.

Assuming the coin you’re selling has a trading pair with your native currency (such as GBP or US Dollars) your cash will now be sitting in your exchange account ready to withdraw.

Withdrawing cash from a crypto exchange

Once you’ve sold your coins it’s simply a matter of transferring these funds to your chosen bank.

But it gets a little more complicated if the crypto you’re selling doesn’t have a direct trading pair with your preferred currency.

In this case you might have to exchange it for a stablecoin (USDT), such as Tether, then convert this coin into the fiat currency you wish to withdraw.

Using an exchange it the simplest way for most people to sell their crypto coins for cash.

You’ll pay higher fees overall, but you don’t have to deal with the more technical side of crypto and if your coins are sat there anyway it’s simply a case of clicking a few buttons to cash out.

How to sell crypto from a hardware wallet

Many people are security conscious when it comes to their crypto and will have moved their digital assets from the exchange where they bought them to a hardware wallet.

There are lots advantages to doing this, including protecting yourself from hackers, and taking control of your crypto keys, but there are downsides as well.

While some hardware wallets enable you to sell you coins directly via a companion app, such as big names Trezor and Ledger, others don’t offer this facility.

This means that you’ll first need to set up an account on a cryptocurrency exchange, then transfer your coins from your wallet to the exchange and sell them using the instructions above.

This adds an extra level of complexity to the process and will also incur additional fees when you move your coins from your wallet to your chosen exchange.

Even if your hardware wallet does support directly selling your crypto, it may not apply to the coins you hold.

Bitcoin (BTC) and Ethereum (ETH) should be fine, but if you hold any obscure altcoins this method may not be available to you.

Using online payment apps to sell Bitcoin and crypto

There are dozens of financial apps that now support crypto, the biggest of course being PayPal which moved into the digital asset space in 2021.

Also, in the UK and across the globe, there are plenty of firms that enable you to purchase Bitcoin alongside your fiat holdings, such as Ziglu, which has been bought by Robinhood.

These services are often quite limited and simply enable you to buy a small selection of cryptocurrencies, such as Bitcoin, Ethereum and Litecoin, which cannot be transferred off the platform.

But despite these restrictions, these platforms make buying and selling Bitcoin and cashing out incredibly simple.

With Ziglu, for example, you can switch between crypto and fiat instantaneously and move your funds off the platform within minutes.

The fees are higher, but it’s great for beginners who don’t want to get involved in the technical side of crypto.

Selling Bitcoin and crypto through a decentralised exchange

If you’re looking for greater anonymity when selling your crypto then a decentralised exchange which enables peer-to-peer transactions is a better option for you.

Using this method means you can carry out crypto trades without the intervention of third parties or the need to provide ID or AML verification.

On P2P platforms you can possibly negotiate a better price for your crypto, secure lower fees and select what happens with the cash you’re paid.

However, using peer-to-peer platforms are more complex and come with greater risks if you’re unsure what you’re doing.

The cryptosphere is awash with scammers and fraudsters looking to relive you of your crypto holdings so make sure you research the platform you’re planning to use thoroughly before trading.

Legitimate platforms offer escrow services meaning your coins/cash are kept secure while the transaction completes.

P2P transactions are definitely a lot more private but staying completely anonymous when selling crypto is increasingly difficult these days.

However, if you use a peer-to-peer platform in conjunction with a VPN and choose a settlement method other than a cash transfer to your bank (gift vouchers for example) you can retain a greater degree of anonymity.

Popular P2P exchanges include:

• Paxful – Slick interface, with plenty of features. One of the largest platforms of its kind.
• HodlHodl – Another easy-to-use P2P platform that has a strong reputation for reliability.

Bitcoin and crypto debit cards

Many of the big provides in both the crypto exchange and crypto interest account space now offer debit cards.

These make your crypto and fiat effectively interchangeable and enable you to spend your coins as you would cash.

One popular exchange which offers this facility is Crypto.com which offers a prepaid Visa card.

While the card isn’t linked to your bank account as a traditional debit card is, it functions in the same way other than you have to top it up via bank transfers, from other cards or using crypto.

Another advantage with the Crypto.com debit card is that you can earn cashback in the form of CRO rewards, CRO being the exchange’s native token.

You can earn between 1-8% CRO cashback depending on how much CRO you stake, ie lock onto the exchange to provide liquidity.

You automatically qualify for 1%, while you’ll need £300,000 to secure the highest reward tier.

Nexo, one of the largest online crypto loans and interest earning accounts, is another platform that offers a debit card, with rewards of up to 2% on each purchase.

The amount you receive depends on how you choose to receive the rewards – 0.5% when earning Bitcoin or 2% when earning NEXO, the platform’s token.

It differs to Crypto.com because you’re effectively using the crypto assets you hold on the platform as collateral for what you spend.

This means that you don’t have to go through lengthy credit checks to qualify for the card, which you can use worldwide, but you do need to deposit crypto in the first place.

Face to face crypto transactions

This is not a method I’d recommend, but for someone who wishes to remain completely anonymous and are fully aware of the risks, it’s one to consider.

There are certain platforms which connect individuals wanting to exchange crypto for cash, together with message boards and other media platforms.

The potential for things to go wrong is extremely high, but if you’ve weighed up all the risks then perhaps it’s an option to you.

Do I need to pay tax if I sell my crypto?

You need to treat your crypto like any other asset meaning if you sell it for a profit there’s likely to be a tax implication depending on where you live.

For example, in the UK selling crypto could make you liable for Capital Gains Tax, depending on the cost of the coin and the profit you make.

You’re given an annual tax free allowance but any profits above this are likely to incur CGT which you can declare in an annual self-assessment return.

There are ways that you can reduce or avoid CGT altogether which we’ve written about here.

You can also use a legitimate method to double your CGT allowance by transferring your funds to your spouse or civil partner. More about this here. If you’re concerned about the tax implications you could use professional crypto tax software to ensure you’re paying the right amount, or hire a tax professional to help you.

Conclusion

As you can see there are multiple ways to cash out your crypto and which you choose will likely depend on where you bought your coins, how you store them and your level of technical knowledge.

Whichever method you choose, security should be at the forefront of your mind, especially if you’re using a P2P platform to preserve your anonymity.

Any financial platform should be treated with caution, and you should do your research and learn how to use it properly before embarking on a transaction.

Remember, cryptocurrency is still largely unregulated and the same protections that apply to traditional financial institutions don’t apply.

For example, in the UK your crypto isn’t protected by the Financial Services Compensation Scheme (FSCS).

But having said this, selling your crypto doesn’t have to be scary!

As long as you educate yourself you should have a trouble free experience and hopefully some healthy profits too.

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