In 2017 bitcoin has grown by around 1,700%, when litecoin managed to surge up by about 7,000% and despite the correction which occurred to the whole crypto market at the end of the year, bitcoin and other cryptocurrencies are still considered as prospective investments.
It might seem pretty easy to pile into digital coins and make fortunes with their help, but there could appear one significant obstacle. And that is cashing out crypto money into fiat or making considerable purchases without having troubles with authorities and tax collectors.
Your Exchange Might be Cancelled or Account Frozen
You may find dozens of successful “cash out” stories online. For example, somebody could have managed to cover their tuition fees, purchase deluxe vehicle or real-estate happily. But you should always pay attention to the other side of the coin as well: especially, when it comes to laws in your country, rules of your exchange and amounts that you are going to cash out. Be ready that you may be stopped in the middle of the process when trying to revert to fiat or vice versa.
As News.Bitcoin.com warns, such giant bitcoin swap platforms as Kraken, Bitstamp or Coinbase and so on will let you go through a strict verification before you try to make such a transaction. And even if you have been approved this doesn’t mean anything.
You won’t be able to throw $100,000 worth of bitcoin down on an exchange and expect to have the asset transferred to your bank account without problems. Just be ready that the exchange may annul the process even after the sale has been made. Moreover, your bank may also become an obstacle on the way to cash out vast sums or even freeze an account. You should also keep in mind that usually in the US and some other countries deposits and withdrawals over $5,000 are controlled for tax evasion and money laundering.
Bitcoin ATMs and Localbitcoins
There’s always another option, and that could be vending funds to a two-way BTM. But the problem is that these machines typically allow customers to sell up to $500 a day, so do vend large amounts, you will probably have to visit bitcoin ATM almost every day within a month and pay up to 10% fee on top. Sound good? Doesn’t seem so.
Well, some of you may decide to use the services of Localbitcoins to revert to fiat. However, in some countries, it might be troublesome to do so as huge Localbitcoins vendors can be arrested for illegal transmission of money or so, e.g., in the US. Ultimately, if you dare to get direct cash for your bitcoin from such sellers in person, make sure you are aware of the deal details and the neighborhood so that you won’t be robbed.
Maybe, one day there will be no need for cashing out bitcoin or any other cryptocurrency as fiat will lose in value or entirely disappear. But as long as you are living here and now, you should take into account the laws that government imposed in your country as well as the rules of your exchanges so that you won’t lose the assets.