How to Withdraw Money From Crypto to Bank Account

Converting cryptocurrency into traditional money and transferring it to a bank account involves a series of distinct steps. This process requires careful attention to platform selection, identity verification, the actual sale of digital assets, and the eventual transfer of funds. Understanding each phase is important to ensure a smooth and compliant transaction.

Selecting a Platform for Conversion

The initial step in converting cryptocurrency to fiat currency for bank transfer involves choosing a suitable platform. Two primary types of platforms facilitate this: centralized cryptocurrency exchanges (CEXs) and peer-to-peer (P2P) marketplaces. Centralized exchanges operate as intermediaries, holding user funds and managing order matching, similar to a traditional stock exchange. P2P marketplaces, conversely, connect buyers and sellers directly, allowing them to negotiate terms and complete transactions without a central authority.

When selecting a platform, several factors warrant consideration. The platform must support the specific digital asset you wish to sell and allow withdrawals in your local currency to your bank account. Fees are another significant aspect, typically encompassing trading fees and withdrawal fees, which can impact the overall cost of your transaction.

Security measures on the chosen platform are also important. Look for features such as two-factor authentication (2FA) and the use of cold storage, where a significant portion of digital assets are held offline, reducing exposure to online threats. Most reputable platforms adhere to Know Your Customer (KYC) requirements, which are mandated by federal regulations for money service businesses handling cryptocurrency.

KYC typically involves submitting personal data like your legal name, date of birth, and address, along with government-issued identification documents such as a passport or driver’s license, and proof of residence like a utility bill or bank statement. Some platforms may also request information regarding your source of funds or transaction history to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. The user interface and overall ease of use should also be considered, especially for those new to cryptocurrency transactions.

Selling Your Cryptocurrency

Once a suitable platform has been selected and your account is established and verified, the next step is to convert your cryptocurrency into fiat currency. This process typically involves navigating to the platform’s trading interface and initiating a sell order for your chosen digital asset. You will specify the cryptocurrency you intend to sell, the amount, and the fiat currency you wish to receive.

Platforms generally offer different types of sell orders that influence how your transaction is executed. A “market order” instructs the platform to sell your cryptocurrency immediately at the best available current market price. This prioritizes speed of execution but may result in a slightly different price than anticipated, especially in volatile markets.

Alternatively, a “limit order” allows you to set a specific price at which you are willing to sell your cryptocurrency. The order will only execute if the market reaches or exceeds your specified price. While this provides greater control over the sale price, there is no guarantee of immediate execution. After a successful sale, the equivalent fiat currency balance will be credited to your account on the platform, making it ready for withdrawal.

Selling cryptocurrency for fiat currency is considered a taxable event by the Internal Revenue Service (IRS), which treats cryptocurrency as property. Any gains realized from the sale of cryptocurrency are subject to capital gains tax. Short-term gains (held one year or less) are taxed at ordinary income tax rates, while long-term gains (held over one year) are taxed at lower rates, typically 0%, 15%, or 20%, depending on your overall income level. Starting January 1, 2025, crypto brokers are required to report the gross proceeds from your crypto sales on a new tax form, Form 1099-DA. From January 1, 2026, they will also report the cost basis to help calculate your gains or losses.

Linking Your Bank Account

Before you can withdraw the fiat currency from your cryptocurrency platform, you must connect your traditional bank account as a destination for the funds. This linkage is a preparatory step that ensures the platform has the correct banking details for a secure transfer. The information typically required includes your bank’s name, your account number, and your routing number. For international transfers, a SWIFT or IBAN may be necessary.

Platforms also require verification to confirm that you are the legitimate owner of the linked bank account. Common verification methods include small deposit or withdrawal tests, where the platform sends a negligible amount to your bank account, and you must confirm the exact amount received. Some platforms may also request manual uploads of bank statements to verify ownership.

Accurate entry of all bank details is important to prevent delays or issues with the transfer. Incorrect information could lead to funds being sent to the wrong account or being returned to the exchange, potentially incurring additional fees or processing times. Once your bank account is successfully linked and verified, it will be registered as a valid withdrawal option on the platform.

Withdrawing Funds to Your Bank

With your cryptocurrency sold for fiat and your bank account linked, the final step involves initiating the withdrawal of funds to your bank. You will typically access a “withdraw” or “cash out” section on the platform, where you can select your linked bank account as the destination. You will then specify the amount of fiat currency you wish to transfer.

Platforms often have minimum and maximum withdrawal limits, which can vary based on your account verification level or daily/monthly thresholds. Once the withdrawal request is confirmed, the platform will process the transaction. The processing time for fiat withdrawals to a bank account generally ranges from one to five business days. Factors such as the withdrawal method (e.g., ACH transfer versus wire transfer) and your bank’s processing procedures can influence the exact duration. Weekends and public holidays may extend this timeline.

It is common for platforms to charge a specific withdrawal fee for bank transfers, which is distinct from any trading fees incurred during the sale of your cryptocurrency. This fee is typically displayed before you finalize the withdrawal request. After initiating the transfer, platforms usually provide a tracking feature within your account history, allowing you to monitor the status of your withdrawal until the funds arrive in your bank account. You may also receive email confirmations as the transaction progresses.