It is very likely that you (or your business) will have one cryptocurrency account with a neo-bank service provider and a (usually mandatory by tax authority purposes) traditional fiat bank provider. To avoid conversion losses, you may be interested in moving the assets from one account to another. Is it possible at all?
Let’s assume that your crypto provider has both crypto accounts and services AND can store fiat accounts with SWIFT / SEPA network transfer capabilities. Your traditional bank naturally has those, but may not have crypto services. What are your options to use your money?
How to transfer cryptocurrency to a fiat account?
Depending on your financial provider, there may be one of four ways to add money to your traditional bank account:
- Cash deposit (must for traditional banks, unlikely for neo-banks with no branch offices),
- Fiat wire transfer through SWIFT or SEPA network (every bank has them), SWIFT is widely available, more expensive and uses multiple banks, SEPA is fast, cheap and works in EUR only.
- Bank card deposit (use your existing VISA or ECMC card, pay and get your own money, it uses cash withdrawal fees, like an ATM withdrawal…not cheap)
- Crypto transfer from another account (1 in 100 traditional banks offers this as of today)
Hardships when transferring crypto-to-fiat
- For money laundering limitations, cash deposit and bank card deposit are capped at a certain - usually low - value per day, and crypto transfer from another account is mostly avoided for the same reason.
- Fiat wire transfer is extensively controlled and checked at every step, but can handle large amounts (you may have to present a contract to show the reason for the transfer, etc.).
Alternative ways to transfer cryptocurrency
Therefore, you must comply with one of these processes to get your money ‘out of crypto’.
- As you can see, the most likely scenario is that you convert your coins (BTC, ETH…) to fiat (USD, EUR…) in a crypto exchange (like Binance) or a crypto banking service provider (like B2B Pay) and then use the well established and traditional means of wire transfer for the movement.
- Alternatively, if your service provider does not provide that service, you may want to find an intermediary service provider, send the coins there in an on-chain ownership transfer, then convert them, then send them out. Same process, more costs.
Because, again, of money laundering concerns it is very likely that withdrawals from such crypto exchanges and services would have to happen into an account owned by the same person, or the account that had been used to top up the account originally. This is a strict limitation, but totally allows the movement of your own assets around the system.
Best practices if your bank accepts cryptocurrency
In the rare case when your bank can receive crypto transfers, you should use them to avoid conversion losses. It is not impossible that even your clients can receive crypto. Ask them about it and avoid all this trouble altogether. Do not forget that the same applies to crypto as to fiat wire transfers. Fees are highly different. BTC transfers could cost you 20 USD, while ETH can be sent over different blockchains, some charging more, some less. Some providers or your clients can handle certain chains, some do not. I often have to spend 10-20 minutes to find out what the best way to send the money would be and then select the provider that can accommodate that need. It is usually a minuscule difference with large amounts, but sending 100 USD at a cost of 4 USD or 24 USD is a significant margin of error.
In summary, you can totally send crypto value to a fiat account (not the crypto coin itself), but the process is defined by the existing fiat technologies and networks that are used by traditional banks. The landscape is slightly and continuously changing as banks are trying to incorporate new services and neo-banks are trying to expand their licenses to cover all banking services. Your best option is to select an account provider that can convert crypto to fiat and is part of the SWIFT/SEPA system so that you save a lot of money and effort on the moving-around process.