When cashing out large amounts of Bitcoin, there are many things to consider. Thankfully most reputable exchanges have an OTC (Over-The-Counter) desk for transactions like these. There are many benefits to using an OTC desk, including lower fees, security, and personalized customer service.
Our recommended exchanges that offer OTC services are:
- For United States: Kraken
- For United Kingdom: CoinJar
- For Europe & International: Binance
- For Australia & NZ: Swyftx
Once you sign up you can get in touch with their OTC team who will guide you through the process.
It is advisable to consult professionals, such as accountants or lawyers specializing in cryptocurrency, to navigate tax obligations and potential legal hurdles in your jurisdiction. The OTC desks listed above might be able to get you in contact with professionals or give you advice about this as well.
As Bitcoin and other cryptocurrencies gain mainstream acceptance, more investors find themselves needing to convert large amounts of digital assets into fiat currency. Whether for personal use, investment diversification, or other financial goals, cashing out Bitcoin can present unique challenges, especially when dealing with substantial sums.
Understanding the best practices and platforms for such transactions, along with the associated tax and legal considerations, is crucial for a smooth and compliant process.
Now, the question: how to cash out large amounts of crypto? Ultimately, you have two choices: through a crypto exchange like Coinbase, or an OTC brokerage.
What You Need to Consider When Cashing Out Bitcoin
People that deal with bitcoin on a daily basis tend to cash out different amounts of their BTC in order to pay for their everyday expenses or to invest in anything from personal tech devices, clothes, traveling, and cars, all the way to buying real estate and funding their own companies. When it comes to cashing out smaller amounts of bitcoin, worth from a couple of hundred to a couple of thousand USD, the process is simple.
How to Cash Out Millions in Bitcoin
But what happens if you are one of those individuals we mentioned that happen to have a few hundred bitcoin in your crypto wallet and wish to convert Bitcoin into fiat money for some serious investments?
In this case, things tend to get a bit complicated since you can’t just exchange a million dollars worth of bitcoin for fiat currency and have them wired over to your bank account, ready for spending.
Withdrawing large amounts of BTC is a serious financial endeavor and needs to be approached carefully. You don’t want to have any unpleasant surprises. These are the main factors you should take into consideration when cashing out bitcoin.
Crypto Exchange Withdrawal Limits
When cashing out smaller amounts of Bitcoin, let’s say a few thousand dollars, you usually don’t have to worry about the withdrawal limits of cryptocurrency exchanges. The most popular crypto exchanges have a high trust rate by users and thus are great for trading digital assets, but also for cashing out. You just need to pay attention to the withdrawal limits.
The exchanges typically have a daily withdrawal limit which can be anywhere from a few thousand dollars to tens or even hundreds of thousands of dollars.
Luckily, if you are a big earner and want to cash out your bitcoin, crypto exchanges offer the possibility of increasing your daily withdrawal limit by upgrading your user account, thus allowing you to withdraw more funds at once.
Significant cryptocurrency transactions can have substantial tax implications. It’s essential to consult with a tax professional who understands cryptocurrency regulations in your jurisdiction.
They can help you plan your cash-out strategy in a way that minimizes your tax liability, such as capital gains tax, and ensures compliance with tax reporting requirements
Things with banks and cryptocurrency cash-outs can often get complicated. It all depends on the bank you wish to withdraw your funds to. With an increasing number of transfers from cryptocurrency exchanges and brokers to bank accounts, more banks are becoming open to working with such transfers.
If it’s your first time cashing out a large number of bitcoin, the best thing to do is to check the bank transfer policy in detail and inform yourself about the potential difficulties your bank might pose.
For example, some banks refuse to deal with cryptocurrency transfers in any way, and it would be an enormous problem if you sent a large amount of money of converted bitcoin to a bank account that denies the transfer. And even if they do accept this sort of transfer, it isn’t uncommon for banks to freeze client accounts that suddenly receive large amounts of money, especially if these accounts were accustomed to receiving regular, small amounts of funds monthly.
From a legal aspect, a large bank transfer is an immediate cause for suspicion. If the bank decides to freeze your account until the source of the money is cleared as legal, and the management is assured that it isn’t some kind of money laundering or fraud, you can lose precious time, which can sometimes mean days or even longer.
Not to mention that providing the source of the funds can be very complicated for money that comes from cryptocurrencies because of the layers of privacy and security that protect user transfer data when dealing with bitcoin, which means you will have a lot of explaining to do before you can access your money.
If your bank does allow transfers that originate from bitcoin, then it’s a great idea to inform the bank officials in advance that you will be receiving a large transfer and to explain the nature of the transaction.
Break the Total Amount of Bitcoin Into Smaller Batches
When you have sorted out all the above-stated factors, you are ready to start transferring your bitcoin and cashing out. Still, it isn’t advisable to finish everything in one transaction.
For security reasons, it is best to break the total amount of BTC into smaller batches, in case something goes wrong during the transfer.
Sometimes, there can be problems with the crypto exchange networks, the bank may freeze your transaction to require further information, or even a cyber-attack by hackers may cause you headaches.
This is why it’s a good idea to withdraw smaller portions of the total desired amount, and many people even recommend the use of different payment methods to cash out bitcoin, in case there is a problem with some of the transfers.
Indeed, you can lower the risk of your funds being endangered by diversifying your cash-out methods, rather than transferring everything at once.
Best Options When You Want to Cash Out Bitcoin
There are several popular ways to facilitate the Bitcoin cash-out process, depending on your preferences, legal advice, and the amount you want to transfer. Before you can withdraw money from your Bitcoin wallet to your bank account and use these funds with your debit card or send them to your PayPal or Escrow account, you need to decide how to withdraw large amounts of crypto first.
Cryptocurrency Exchange Platforms Like Coinbase
One of the most commonly used methods to sell bitcoin and convert them into fiat currency is through a cryptocurrency exchange platform. All you have to do is connect your bank account to your exchange account on a platform like Coinbase, and you can start withdrawing bitcoin.
Exchanging your BTC on such websites comes with fees, but it’s a pretty secure way for cashing out bitcoin, especially on well-known platforms trusted by users.
Coinbase is easy to use for transferring smaller amounts of bitcoin, but it’s also a great platform for cashing out larger sums. All you have to do is upgrade your account to Coinbase Pro and you can exchange all the bitcoin you want for fiat currency.
The platform charges an initial transfer fee based on the current spread and another one that is formed according to the amount of funds you wish to withdraw. You will see the precise fee in fiat currency before the transaction is initiated.
It’s always good to check withdrawal fees in advance so that you don’t have any unpleasant surprises. With Coinbase, you can transfer multimillion-dollar sums easily.
Over-The-Counter (OTC) Desks such as Kraken’s
Another popular option for cashing out large amounts of BTC are over-the-counter (OTC) brokers or OTC desks. Selling large amounts of bitcoin is even possible with OTC brokers. OTC refers to companies or individuals that deal with cryptocurrency transactions and withdrawals independently of exchange platforms.
These brokers specialize in facilitating transfers and help you withdraw large amount of crypto. Multimillion-dollar transfers are nothing new to them.
One of the main benefits of cashing out large amounts of crypto with the help of OTC brokers is that you can negotiate a fixed price for buying fiat currency, so the exchange price doesn’t rise while converting your bitcoin because you are buying from cheap sellers first and then from the more expensive ones.
Kraken, one of the most popular centralized exchanges, has its own desk with specialized OTC services for withdrawing large amounts of assets. The platform provides top-quality one-on-one OTC broker services in order to tailor each transaction according to your needs. If you become a frequent high-volume bitcoin trader, the platform also provides you with a personal account manager.
Preparing for the Transaction
Verification and Limits
Before initiating a large cash-out, ensure your chosen platform or broker has verified your account to the highest level. Higher verification levels often come with increased withdrawal limits. This process might require providing additional personal and financial information.
When dealing with significant sums, security becomes paramount. Utilize all available security measures offered by the platform, such as two-factor authentication (2FA), withdrawal address whitelisting, and hardware security keys. Additionally, consider the security of your own devices and networks.
Timing and Market Conditions
The cryptocurrency market is volatile, and timing can significantly affect the fiat amount you receive. While it’s impossible to perfectly time the market, consider the current market trends, news, and potential upcoming events that might affect Bitcoin’s price. Some prefer to stagger their sales to average out the volatility.
Frequently Asked Questions
How to sell large amounts of Bitcoin?
Crypto exchanges such as Binance, Coinbase, Kucoin, Gemini, etc., offer the functionality of selling large amounts of cryptocurrency.
A Few Words Before You Go…
Cashing out large amounts of Bitcoin requires careful planning and consideration of several factors, including the platform or broker’s choice, tax implications, market conditions, and legal compliance.
By taking a measured and informed approach, you can ensure a smooth process that maximizes your returns while adhering to regulatory requirements.
Consulting with financial and legal professionals familiar with cryptocurrency can provide additional guidance tailored to your specific situation, helping you navigate the complexities of large-scale Bitcoin transactions.