Guide: How to safely and most importantly legally withdraw your cryptocurrency

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There are at least six ways to exchange bitcoin for traditional money.  We will tell you how to do it cheaper, whether you have to...

There are at least six ways to exchange bitcoin for traditional money. We will tell you how to do it cheaper, whether you have to pay taxes and in which case the bank can block your card.
There are many options for withdrawing cryptocurrency and exchanging it for fiat money. This can be done using exchangers, directly from exchanges, for cash in person, and in other ways. We tell you in detail about each of them, about the possible risks and commissions, and explain whether you need to pay taxes and how to do it.

Exchangers

Exchangers are the most popular way to withdraw digital coins. These are special services that allow you to sell cryptocurrency for fiat money, and then send it to a bank card, payment system like PayPal and others.
Cryptocurrency cashing is done as follows:
  • the user chooses the exchanger;
  • indicates which cryptocurrency and how much he wants to withdraw;
  • in response, the exchanger determines the amount received, for example, in rubles, and also indicates the address to which the coins should be sent;
  • the user transfers coins to the specified address. In some cases, after that, on the exchanger's website, you must click the "paid" button. If you do not, the money will not be transferred;
  • when the cryptocurrency arrives at the address of the exchanger, its employees will process the transaction and transfer funds to the user's account.
Important! When using an exchanger, you need to transfer exactly the number of coins that was negotiated in the transaction. Otherwise, the service will not see the transaction and funds may be lost.
Usually the process takes about 10-15 minutes, sometimes faster. If more time has passed, write to the technical support of the service and find out what is the reason for the delay. It can happen due to the congestion of the cryptocurrency network, in such cases, transactions are confirmed slowly. Or you could have made a mistake in the data when filling out the application. In this case, the cryptocurrency is likely to be irretrievably lost. Therefore, check the details very carefully.
Exchangers charge commissions for their services. Their value can vary from 1% to 10%, in rare cases - significantly exceed this value. The amount of fees depends on the cryptocurrency that the user withdraws, on its stock at the service, on withdrawal methods and other factors.
When withdrawing funds, you should also take into account the internal fees of payment systems. For example, you will give 1-2% to the exchanger for a transfer to Yandex.money. And then you also need to pay the payment system for transferring funds, say, to a bank card. For this reason, sometimes it is better to withdraw directly to a credit card, even if this is not the most advantageous offer.
Special aggregators will help you choose the exchanger with the best rate. On these, you can filter services by withdrawal methods, prices, user reviews and other parameters.
There are also risks. There are many exchangers and, as a rule, they can be backed by a small organization or a small circle of individuals. In this regard, there is a possibility that a trader will accidentally use the services of scammers. Therefore, the withdrawal of cryptocurrency when using an unfamiliar service is safer to start with a small amount.

Exchanges

You can avoid using exchangers. Many exchanges now have the ability to withdraw funds to a bank card. On the one hand, it is more convenient and safer, because it reduces the risk of an unscrupulous counterparty.
On the other hand, commissions for withdrawing cryptocurrency directly from the exchange can be significantly higher than those set by exchangers. Reason: Marketplaces rarely handle fiat currencies on their own. Instead, they enter into partnerships with other services.
In other words, when cashing out a cryptocurrency, the trading platform transfers funds to a third-party service, and that service already transfers money to the user. In this case, he immediately pays a double commission, the total value of which can reach 4-5%. Always check the withdrawal conditions!

More commissions

When withdrawing a cryptocurrency, the user pays commissions not only to exchangers and third-party companies, but also to the exchange itself. Therefore, when withdrawing digital assets, you should always check the fees. It can depend on the trading platform on which the trader is registered, as well as on the specific digital coin.
For example, on the Binance exchange, when withdrawing bitcoin, a client will pay 0.0004 BTC or $ 3.8 at the current rate. In the case of Ethereum, the commission will be 0.003 ETH or $ 0.72. It is more profitable to use the Ripple token, in this case the fees will be 0.25 XRP or $ 0.05. Similar prices on other trading platforms. However, on smaller exchanges, fees tend to be higher.
When withdrawing a cryptocurrency, one should take into account the risk that its rate may plummet. For example, on June 2, the price of bitcoin dropped from $ 10,150 to $ 9400 within a few minutes, and on the Bitmex platform it fell to $ 8600. Therefore, it is safe to withdraw funds in stablecoins - these are cryptocurrencies, the rate of which is pegged, for example, to the dollar. The most famous of these is the Tether USDT token.
To prevent losses due to a sharp drop in the exchange rate, the exchangers came up with a solution - freezing the exchange rate. Some services, when concluding a deal, allow you to temporarily fix the price at which the cryptocurrency will be sold. Typically 15 minutes. However, additional fees may apply for this option.

other methods

You can also cash out cryptocurrency using cryptomats - this is an analogue of ATMs. Each of them has its own digital address. The user can transfer funds to it and thus cash out bitcoin and several other popular coins.
Crypto ATMs have several drawbacks. Firstly, these are large commissions, often over 5%. Secondly, they are very difficult to find. According to the online map cryptocoinmap.ru, there are only 5 such machines in Moscow now. Thirdly, the risk of the counterparty: you can use a device installed by fraudsters.
Another equally risky way to exchange digital money for traditional money is a cash transaction. For example, to negotiate with a familiar person in person and to make a deal at the meeting. Such operations should only be carried out with people you trust, because there are many ways to cheat. A partner can pay at the wrong rate, disappear when receiving cryptocurrency, appropriate it for himself, citing a technical error, or simply rob it.
However, it is safe to conclude a deal with another person and exchange cryptocurrency without intermediaries. This will help p2p-platforms (p2p - person to person - from person to person). The most popular of these is LocalBitcoins. On it, the user conducts an operation with another user, and the service acts as a guarantor that one will not deceive the other.
At the moment, it is more profitable to withdraw Bitcoin through LocalBitcoins than through exchangers. However, there are several downsides to this. First, the price is indicated without the commission that the bank or the system will take for the transfer. Secondly, peer-to-peer services are less popular than exchangers and exchanges. Because of this, there are few offers for buying and selling cryptocurrency, and if there are any, then often for small amounts.
Another non-standard way of exchanging cryptocurrency for fiat is through Telegram bots. The messenger has channels where you can buy and sell bitcoin and other coins, as well as store them on a wallet linked to your Telegram account. However, this is very risky. A trader entrusts his money to a complete stranger who is unlikely to be able to get in touch with if something goes wrong.

Tax

Cryptocurrency transactions are not always, but they can generate income. In this regard, the user must pay tax on the transactions performed. Its value is 13%, said Yuri Brisov, a member of the Commission on Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association.
“Individuals pay income tax. Property sales tax in Russia is 13%. A citizen must deduct from the amount in rubles received as a result of "cashing out" the cryptocurrency, the amount in rubles that he spent on the purchase of cryptocurrency. You should pay 13% from the difference, ”the expert said.
He added that printouts from wallets confirming the formation of income should be attached to the personal income tax form-3 submitted to the tax office. However, there is no such requirement, and the declaration can be submitted simply by indicating the amount of income. Dmitry Kirillov, senior tax lawyer at Bryan Cave Leighton Paisner (Russia) LLP, lecturer at Moscow Digital School, agreed with this. According to him, the Ministry of Finance of Russia has repeatedly expressed its position (the last time it was in letter No. 03-04-05 / 74126 dated September 26, 2019) that the income of individuals from the sale of cryptocurrency minus the cost of its purchase is subject to personal income tax at a rate of 13 %. A little more than a month remains to pay tax for 2019.
“To pay tax for 2019, you need to submit a tax declaration in the form of 3-NDFL to the tax authority at the place of your registration in person, by mail, through the MFC or in your personal account on the website of the Federal Tax Service of Russia, and pay personal income tax. This year's declaration, due to the pandemic, can be submitted before July 30, but the tax payment deadline has not been extended - the payment must be made before July 15. The tax authorities can conduct a cameral examination of the declaration and request additional documents and explanations, ”Kirillov explained.

Cashing out cryptocurrency in parts and blocking bank cards

Brisov explained that when cashing out cryptocurrency, you shouldn't split it into small amounts. This will not prevent the bank from checking the transaction if it considers it suspicious. Moreover, dividing one payment into several small ones in international practice is perceived as unfair practice and always raises questions from the monitoring service. Therefore, any "cunning" schemes can incur the wrath of not only the bank, but also law enforcement agencies on their executor.
“Experienced participants in crypto-turnover know that banks have“ flags ”for certain amounts, so they often advise to“ split ”payments into amounts up to 50 or 30 thousand rubles. The law does not provide for such restrictions on the amount, and banks can check any suspicious transaction even for 1 ruble ... It is not recommended to engage in "splitting", you just need to indicate the legal basis for the transfer, save transaction confirmations and pay tax on time. Thus, under the current legislation, cryptocurrency activities should not bring problems, ”Brisov said.
Efim Kazantsev, Ph.D., an expert at Moscow Digital School, added that the bank may block funds if the cryptocurrency cashing operation seems suspicious to him. This is provided for by Federal Law 115-FZ "On Counteracting the Legalization (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism."

Summary

There are at least six ways to withdraw cryptocurrency. The most popular way is through exchangers. Aggregators will help you choose a service with the most favorable rate and provide an opportunity to work with a huge number of payment systems. But there is a risk of using the services of scammers and losing money.
The most convenient way to withdraw funds is through exchanges. However, not all marketplaces have this option. In addition, an additional commission may be charged for withdrawing cryptocurrency if the transaction takes place through third-party services.
By law, a citizen of the Russian Federation must pay tax when cashing out cryptocurrency. Gray schemes, for example, avoiding this by splitting the withdrawal amount into parts, can lead to card blocking. Such transactions are recognized by banks as suspicious.

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Crypto Currency Magazine: Guide: How to safely and most importantly legally withdraw your cryptocurrency
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