You either invested in bitcoin very early and are googling “how to cash out large amounts of bitcoin” from your private island, or you are super confident in your newly found hobby and think you will hoard a lot of crypto with your trading and other crypto skills and want to know how and where to cash out your bitcoin fortune when the time comes.
People with big chunks of crypto have to take a lot of stuff into consideration before converting their coins into fiat: daily cash-out limits on exchanges and regulatory scrutiny are some of the top concerns when cashing out.
This article will focus on various ways you can cash out large amounts of bitcoin and how it differs to cashing out a smaller amount of bitcoin. By the end of it, you will know what to take into account before making your bitcoin moves. So, get ready, and let’s do this!!
Difference Between Cashing Out Small and Big Amounts of Bitcoin
Before delving deeper into the nitty-gritty of cashing out big and small amounts of bitcoin, you need to know the meaning of large and small amounts. Your idea of big or small may be different from another person. A prominent investor, a whale or an early adopter is more interested in cashing out millions from bitcoin, whereas the majority of other traders fall within the category of small fish that cashes out tens of thousands of dollars. We all have an idea of what is large and small, but the course of action is what matters most. So, let’s address the differences.
•✔️ Levels of risks involved
It is not the same to cash out 100 bitcoins or 0.1 bitcoin.
•✔️ Financial limits
Bitcoin OTC brokers, just like their traditional financial institutions, have put limits on how much you can trade for your digital currency in one go. This is usually not an issue when you’re converting small amounts into fiat.
•✔️ Regulatory measures
Any meaningful sum of money being moved from crypto into traditional finance systems triggers a slew of alarms and compliance measures within banks or other institutions you use when transferring money from one world to the other.
Small amounts usually fly under the radar and don’t raise red flags.
Regardless of the bitcoin amount you want to cash out, you are subject to taxation according to the capital gains principles. In other words, what you gain while buying and selling bitcoin ought to be taxed.
If you are an investor or corporate agent looking to cash out millions in bitcoins, get ready for massive taxation. You should consult a tax professional before you can conduct a large OTC cryptocurrency operation.
Things to keep an eye on before you cash out bitcoin
You want to convert bitcoins into your local currency, right? The process is fairly simple but there are some things you need to be ready for before you start.
•👉 Transaction fees and the steps involved by each process
Pay attention to the transaction fees as they can eat into your funds if you don’t choose the conversion place wisely. After all, the slew of crypto exchanges that are still popping up by day is there for a reason – profit. It is obviously very profitable business and core earnings generator of this business model are fees paid by the users.
•👉 Your withdrawal amounts
You should know the amount of bitcoin you want to cash out beforehand and check if the platform you plan to use allows withdrawals of such amounts in one or multiple stages.
•👉 Where do you want to send your funds
Beforehand, you ought to know if you are going to use your bank account or something like PayPal or other payment apps as a landing spot for your newly converted money.
•👉 How long until the money reaches your account
Find out the duration of your cash-out transaction to know when to expect the money on your account. Some processes may take longer than others.
•👉 Local laws
Pay attention to the cryptocurrency regulatory laws in your country of residence. Anti-money laundering and taxation are two main choke points where regulators can strike if they find your activity suspicious.
Each of the above factors may influence the convenience of the cashing out method you pick.
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Possible Ways to Cash Out Big Amounts of Bitcoin
If you have been following the cryptocurrency markets, you know that you can use a plethora of ways to cash out your bitcoins. However, not all of them are well-suited for large amount movements. Let’s look into the major cashing out avenues of the crypto world:
👉 Trust based centralized exchanges
Most people use third-party brokers or exchanges for buying or selling crypto. However, most of the digital currency exchanges have strict limits on how much money you can withdraw in one day, week or month.
There is also an extensive KYC (even more detailed than the regular one) where they literally want to know everything about you, since your birth to the present day.
And there is a waiting period as well.
If you want to cash out through a broker exchange such as Coinbase, it will take you one to five days for the money to land into your bank account.
But, if you prefer anonymity in your transactions, the number of options at your disposal drops down drastically. But we will explain this part later on. Let’s first check the exchange landscape and see which one fits best for withdrawing a larger amount of bitcoin.
There are two levels of limits on Binance, regarding how much cryptocurrency funds can be withdrawn from an account. Accounts that are at level 1 can only withdraw a maximum of 2 BTC in 24 hours. Verified accounts are at Level 2 and can withdraw as much as 100 BTC in 24 hours. Binance offers you wire transfer options or a credit card for cashing out your bitcoin.
KuCoin is another exchange you can use to cash out your bitcoins. Withdrawal limits are tiered into 3 levels: unverified and KYC1 level users can withdraw up to 5BTC per day, while fully verified KYC2 level users can withdraw 200-3000BTC per day.
You have withdrawal options that include SEPA transfer, credit cards, POLi, iDEAL, and Faster Payments.
KuCoin charges a withdrawal fee amounting to 0.0004 BTC when you withdraw BTC. This fee is also below the industry average.
This is another popular exchange that allows fiat deposits and withdrawals. Kraken processes the most Bitcoin to euro transactions. They also support other significant currencies like USD, CAD, and JPY. Cashing out your bitcoins on Kraken allows you to withdraw to your local bank account. Their withdrawal fees are meager, and you can sell Bitcoin for USD and wire transfer it to your bank for $5.
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You can use Bitpanda exchange to cash out our bitcoins too. This platform allows you to trade using Euro, Swiss franc, British pound, USD, and a wide range of payment methods to deposit or withdraw your funds. Similarly to other exchanges, depending on your verification status and chosen payment method, Bitpanda allows up to €5 million withdrawals (with SEPA method) or €100k with online payments, per day.
When it comes to Coinbase and deposits/withdrawals, it is always better and cheaper to use Coinbase Pro for these processes. Withdrawals of both cryptocurrency and fiat currency are limited. Coinbase Pro account holders have a daily withdrawal limit of $50,000/day. This amount applies across all currencies (for example, you can withdraw up to $50,000 worth of ETH per day).
Limits are highly dependable on the verification level of your account and vary a lot for different users. You do have an option to contact Coinbase support and ask for limit increases.
Another very popular exchange run by the Winklewoss brothers. There is a daily limit of $5,000 and monthly limit of $30,000, along with a $100,000 daily withdrawal limit for personal accounts. There is a daily limit of $10,000 and monthly limit of $300,000, along with a $100,000 daily withdrawal limit for institutional accounts. Bank Transfer (ACH) deposit limits reset every 24 business hours, which does not include the weekend or Federal US holidays.
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Also depends on your verification levels but if you want to cash out larger amounts, you will need to have the “Enhanced” verification level which sets no limits on withdrawals. Otherwise, there is a $10k daily limit.
👉 Peer-to-Peer (P2P)
This is a direct transaction between two individuals. You can have a live or online one-on-one meeting with your buyer. The transaction can be facilitated either by an OTC broker or a P2P marketplace suchs as Localbitcoins or Paxful.
The only difference between the two is that OTC brokers are professionals that do mediation of this kind for a living while Peer-to-peer marketplace is just a bunch of people bartering their assets between each other. If you like anonymity, then off-exchange is the best option you have, but you must be aware of scammers who want to fleece you of your bitcoin.
⚡️ OTC brokers
Over-the-counter brokers are probably the best choice for cashing out large amounts of bitcoin. They work off the grid and buy and sells via these services do not reflect on the exchange prices of the asset. OTC brokers pair the buyer and the seller directly. These deals involve a lot of trust so you need to be very diligent when picking out the OTC broker. Also, be ready to pay a bit more for the service fees of the broker.
It’s the worst mistake you can make if you are trading cryptocurrency for USD. It attracts gullible traders who want to evade fees and taxes. Unlicensed vendors pose a risk for you because you may lose all the money and get into trouble with the law. Imagine if you want to cash out significant amounts of bitcoin using unlicensed vendors. Are you going to take the risk?
⚡️ P2P platforms
Localbitcoins or Paxful are two of the most popular platforms of this type. They used to be anonymous but nowadays they too require a full KYC. If you find a match for your selling bid, you can offload a large amount of bitcoin via this method.
⚡️ Back Alley Trading
As earlier indicated, even though you may want to save on fees and evade taxes, this is not the best option to cash out your bitcoins. Back-alley trading attracts unscrupulous traders and unlicensed vendors who pose a risk to your digital currency investment. You may want to consider other options listed above to cash out on your coins.
👉 DEXes (Bisq, LocalCryptos.com, hodl hodl)
These platforms allow you to sell your bitcoins under your terms. Localcryptos will enable you to sell our BTC or ETH at just 4% under the spot price. Bisq is an open-source platform you can use to trade your BTC and other cryptocurrencies.
Hodl Hodl is another p2p exchange whose 3% offer falls under the market price. All these are options you can use to cash out your bitcoins but the main issue with them is low liquidity. So it might take a while before you unload all of your crypto funds.
How to cash out large amounts of bitcoin on-exchange
To sum it up, cashing out larger amount of bitcoin via exchanges goes as follows:
Choose an exchange that allows fiat currency and sign up an account if you don’t have one. Verify your account and deposit bitcoin. Then, choose the payout method (best is to go with bank wire or SEPA) and request a withdrawal.
How to cash out large amounts of bitcoin off-exchange
If you want anonymity not provided by the normal exchange platforms, the off-exchange is the best option here. You will deal with OTC traders who trade in multi-million-dollar trades regularly.
Or you go to P2P bazaars such as LocalBitcoins or Paxful and register and verify your account. Once everything is set up, you can look for the market for your bitcoins. After you find an interested buyer, you can send your coins to LocalBitcoins or Paxful escrow, and they can hold it for you. Once you receive your payment from the buyer, notify them, and they can release your bitcoins to the buyer.
Cashing out a large sum of bitcoin is possible but you will hardly be able to do it anonymously. A full KYC and a lot of checks by the exchanges and regulators are inescapable. If you choose this route, paying taxes on the money you withdraw is also compulsory so take that into an account as well. To help you with your taxes, we have compiled a list of crypto tax calculators that make this endeavor a real breeze.
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com