How to Sell Crypto for Fiat on an Exchange

Traditional centralized exchanges are by far the best way to sell crypto for fiat currency. 

It is not the only existing method, but since decentralized exchanges (DEX) do not support fiat currencies, there are often not many alternatives to CEX (centralized exchanges) for selling crypto into fiat. 

Before demonstrating how it’s done, it’s important to clarify: generally, unlike crypto, online platforms that use fiat currencies are legally required to conduct identity verification (KYC), therefore it is not possible to operate on such platforms anonymously. 

Aside from that, selling crypto for fiat on an exchange is a common operation to cash out profits, but it still requires attention to security, fees, and tax aspects. 

Choosing the Exchange

The first thing to do is choose the exchange. 

It should be noted that there are thousands of different exchanges, but it is advisable to limit your choice to the main ones, namely those commonly considered more reliable. 

Moreover, not all exchanges support all cryptocurrencies and fiat currencies, so the choice of exchange is very important since it is only usable if it supports the cryptocurrency you want to sell and the fiat currency you want to cash out. 

Finally, it is advisable to prioritize choosing national exchanges, because domestic transactions in fiat currency are less problematic, and especially because in case of issues, it is better to have the possibility to interact with someone who speaks your language. 

For example, when it comes to euros, it would be advisable to choose an exchange with its operational headquarters in the EU country where you reside, so you can make a non-international withdrawal. 

Alternatively, there are also highly reliable non-EU exchanges that support euros, such as Coinbase, Kraken, Binance, or Crypto.com. 

It is also advisable to pay close attention to the withdrawal methods provided by individual exchanges, because, for example, few support fiat withdrawals via PayPal, while bank transfers are often supported. Some also offer the possibility to link a Visa or Mastercard debit card to the account to make payments funded by the crypto or fiat currencies held in deposit with them. 

Preliminary Operations

Before you can execute a crypto sale for fiat currency on an exchange, three preliminary steps must be completed. 

The first step, of course, is to register with the exchange by opening your own account. The registration process is similar to that found on many other platforms. 

One of the major challenges, however, is the second preliminary operation, often mandatory, namely identity verification.

In fact, all platforms that support fiat currencies require the so-called KYC (Know Your Customer), and unfortunately, it is a procedure that is never particularly immediate. In some cases, it can even be problematic, as photos of documents and sometimes even proof of residence are required. 

The third preliminary operation is, of course, depositing crypto on the exchange. Each exchange has its own deposit procedure to follow, but generally, they are all extremely similar to each other. 

In fact, you need to send your crypto from the wallet where they are stored to the specific address provided by the exchange when you initiate the deposit procedure on the platform. 

However, if the funds are already on the exchange, this procedure is not necessary. 

The Sale

There are often two different modes of sale. 

The first, widely used, is the immediate and cost-effective one, often also referred to as “conversion”. 

In reality, this method is often preferred simply because it is very straightforward and immediate, but it is not advisable as it usually incurs higher commission fees. Additionally, the selling price is often slightly below the market rate. 

It would be advisable to proceed with the second method, which, however, is sometimes available only in the professional versions of the platforms. 

To proceed with the first method, namely “conversion”, simply identify the crypto you wish to sell on the exchange, after depositing the funds, and select the “Sell” option.  

Subsequently, it is sufficient to follow the instructions, which vary from platform to platform while being almost always more or less the same, requiring you to enter the amount and confirm the sale. 

The second mode, however, is more complex and is often accessed by clicking on “Trade” or “Exchange”. 

In this case, the first step is to select the trading pair, consisting of the crypto you wish to sell and the fiat currency you want to receive. 

This mode, in turn, supports two different types of trading: market orders and limit orders. 

Market orders are executed immediately at the market price, but they are riskier because if they are executed at a time when there are few buy orders pending, the selling price could be lower than expected. 

Limit orders, on the other hand, allow you to specify a minimum selling price, but they are executed only if there are already buy orders loaded into the system at that minimum price. 

At that point, simply enter the amount and confirm the transaction. 

In both cases, it is essential to thoroughly check the transaction cost before confirming it to avoid any unpleasant surprises. 

These fees vary from platform to platform and are not always clearly displayed at the time of sale. 

The Withdrawal

After confirming the sale, the exchange will proceed to execute it. 

Once executed, the sold crypto will have been removed from your account, and the fiat amount received from the sale, net of fees, will have been credited instead. 

At that point, it is possible to proceed with the fiat currency withdrawal from the exchange. 

The withdrawal process is practically identical to the deposit, just in reverse. Each exchange has its own withdrawal procedure, but they are all extremely similar. 

What changes are the methods of collection and the commission fees. 

In truth, withdrawal fees are often waived, but it’s advisable to check because on some platforms they can reach up to €5 per withdrawal. 

The withdrawal methods, however, are not always similar, because while bank transfer withdrawals are almost always available, PayPal, for example, is rarely an option (it is available on Coinbase), and even more rarely is it possible to withdraw to credit cards. 

However, several exchanges offer their own Visa or Mastercard debit card to withdraw or pay using the funds available in your account. 

Risks

The risk that requires the most attention is account breaches by hackers. It is crucial to secure your access thoroughly to prevent anyone else from gaining entry and stealing your funds. 

The second risk is generally related to the security of the exchange, which is why it is advised against leaving your funds deposited on crypto exchanges for an extended period. This is also the main reason why it is advisable to choose well-known and tested exchanges. 

The third risk is related to the volatility of crypto prices, as the selling price can change even just a few minutes later. The solution in this case is to use limit orders instead of market orders. 

To all this, a limitation must be added: fiat currencies can only be withdrawn when banks are open, which means only on weekdays. 

However, there is still one last risk, which is limited to those countries that tax capital gains. In fact, a sale of crypto into fiat is often taxable, with a tax applied as a percentage of any potential capital gain. For these matters, it is advisable to consult professionals in the tax sector to understand clearly how to proceed in each country.