Here’s a situation: your project’s initial coin offering (ICO) was a success. Your crypto-wallets are full of Bitcoins, Ether, Litecoins and any other cryptocurrency you were accepting contributions in. Now is the time to celebrate and start putting the collected funds to use.
However, regardless of how much you managed to raise in cryptocurrencies, you will still need to make a lot of settlements in fiat currencies like the US dollar or euro. Be it paying for legal services, PR-campaigns, rent, bills, late night food deliveries and whatever else, you will need to cash out your proceeds.
Of course, while there are some advertising agencies and legal firms which might accept payments in cryptocurrencies, most third parties as well as your own employees will demand to be paid in their local currencies.
Withdrawing cryptocurrencies to fiat, especially when it comes to large amounts, is a very daunting process. But if you’ve properly prepared for your ICO campaign, you and your legal team should already have a solution to this.
These days, a lot of banks all around the world are exploring and making use of Blockchain technology. However, the absolute majority of banks are still extremely conventional, and despite adopting Blockchain, they really don’t like anything to do with cryptocurrencies.
A growing number of banks worldwide are refusing to serve cryptocurrency-related businesses. Heads of the world’s biggest banks have been labelling cryptocurrencies a fraud. And even if you manage to find a bank that won’t refuse working with your business, you need to be prepared for months of legal deliberations and paperwork filing.
That’s because banks will require your project to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) policies. So, expect the bank’s representatives getting in touch with you to try and find out exactly how ‘clean’ your funds are, asking you questions about Source Of Funds (SOF) and Source Of Wealth (SOW). Most likely, you will be required to verify virtually every contribution, no matter how big or small.
Even after you’ve done all that and managed to set up an account, you’ll always have a threat of the account being shut down. Some key words, such as Bitcoin, ICO, Ether, TGE and so on might lead to your account being closed and your transactions being reported as suspicious and potentially fraudulent.
Cashing out via an exchange is a different story, but it’s equally as complicated. To begin with, you usually need to have a bank account linked to your profile in order to be able to withdraw funds from an exchange. Eventually, after a long verification period, you will have to make your peace with long waiting times and high transaction fees.
Then, of course, there is the hurdle of finding a suitable and trusted exchange that operates in your local fiat currency and is legal in your jurisdiction.
As always, we are warning you against keeping your funds in a wallet provided by an exchange. Remember, you are never in control of such wallets. There have been many instances of exchanges being hacked and losing all the money stored on them or simply running away with people’s funds.
Trying to withdraw the entire $15 mln you’ve just raised will be a logistical nightmare, which will inevitably raise a lot of suspicion and most likely result in your project being investigated by authorities. The best strategy here would be cashing out small amounts that the project actually needs every other month or so.
There are a few ways of going about it:
As of yet, there are no one-stop solutions for project cashing out big amounts of funds raised through an ICO. However, Bitwala are currently building a platform that is supposed offer ‘a banking experience that merges the crypto and fiat worlds’.
Alternatively, here’s a (rather small) list of countries with a generally positive attitude to ICOs which will be ready to open a bank account for your project’s needs:
Follow us on Facebook