Key Takeaways
- There are several methods on how to transfer USDC to bank account, including centralized exchanges, crypto wallets, P2P platforms, stablecoin bridges, and cryptocurrency debit cards – each comes with pros and cons;
- When choosing a method, consider several key factors, like your location, preferred payment method, and fees you’re willing to pay;
- Be aware of security risks like phishing attacks, as well as fraud and tax consequences of withdrawing USDC, including capital gains tax and reporting requirements.
Let's say you've accumulated USDC, but urgent financial needs are coming up (e.g., your favorite singer just announced a concert!). In the case of time-sensitive expenses like this, knowing how to transfer USDC to bank account effectively is important (you don't want to throw away this once-in-a-lifetime experience, right?).
There are several ways on how to turn USDC into cash, from using a centralized exchange like Binance or employing a P2P platform provided by Bitget. In this guide, I'll walk you through those various methods, so you can pick the most suitable one for you!
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Table of Contents
- 1. How to Transfer USDC to a Bank Account
- 2. Step-by-Step Withdrawal Process
- 2.1. How to Cash Out USDC on a Centralized Exchange?
- 2.2. How to Cash Out USDC on a Crypto Wallet?
- 2.3. How to Cash Out USDC on a P2P Platform?
- 3. Things To Consider While Cashing Out USDC
- 3.1. Fees and Transaction Times
- 3.2. Security
- 3.3. Regulatory Compliance
- 3.4. Tax Implications
- 4. Conclusions
How to Transfer USDC to a Bank Account
Stablecoins like USDC can be a tool to mitigate the downside risk of cryptocurrency portfolios[1], making it a popular option to store and transfer value. However, there may come a time when you need to know how to transfer USDC to bank account for various reasons, such as paying bills, making purchases, or simply accessing your funds.
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In that case, you can choose one of these methods on how to transfer USDC to bank account:
- Centralized exchange
- Cryptocurrency debit cards
- Crypto wallet
- P2P platforms
- Stablecoin bridges
Let’s discuss all of these approaches one by one, starting with the pros and cons of withdrawing your USDC with a centralized exchange, such as Binance, Bybit, or Kraken.
Centralized Exchanges
In my opinion, centralized exchanges are one of the most common and straightforward ways to learn how to turn USDC into cash. These platforms offer a user-friendly interface and often have built-in fiat offramps, meaning you can quickly withdraw your cryptocurrency and convert it into fiat currency.
This method generally requires you to sign up and complete the know-your-customer (KYC) verification process. Then, link your bank account to the exchange and initiate a withdrawal. The funds typically are transferred to your bank account within a few business days.
To ensure you complete the process of how to turn USDC into cash seamlessly, make sure the exchange supports the fiat currency you want to receive in your bank account. Top exchanges like Binance and Bybit generally support multiple fiat currencies. Binance, for example, supports 16 fiats for withdrawal, including AUD and IDR.
Crypto Debit Cards
Some exchanges like Bybit and Coinbase provide a crypto debit card to spend your USDC directly without converting it to fiat currency (so, it's not withdrawing per se). Generally, these cards can be used by merchants worldwide that accept Visa or Mastercard, enabling a convenient and accessible way to spend your USDC. This can be particularly useful for travelers or individuals who frequently shop at international merchants.
However, some cryptocurrency debit cards may charge loading, spending, or inactivity fees, which can be on the higher end. Also, like any physical card, cryptocurrency debit cards can be lost or stolen, potentially leading to unauthorized transactions.
Crypto Wallets
Another method on how to send USDC to your bank account is to use a cryptocurrency wallet. Although the fees may vary, some wallets offer free services to transfer USDC into cash – you only need to pay the gas fee for the transaction on the blockchain.
Still, not all wallets support this feature because some need an exchange to bridge the USDC to a fiat. Therefore, make sure you choose a wallet compatible with a direct withdrawal method or one that supports the necessary integrations.
P2P Platforms
The next option on the list is via a peer-to-peer platform. P2P platforms offer a decentralized peer-to-peer approach to withdrawing USDC to a bank account. These platforms connect buyers and sellers directly, allowing you to negotiate terms and exchange USDC for your preferred fiat currency.
With the peer-to-peer approach, you may get more competitive exchange rates. Though, there are also some downsides to this method of transferring USDC to your bank account – it's typically less secure than via centralized platforms and can be time-consuming to find a suitable seller.
Stablecoin Bridges
The last option you can consider when learning how to send USDC to a bank account is stablecoin bridges. Popular options include Circle's USDC Bridge and Paxos's PAXG Bridge. This method offers a direct way to withdraw USDC to a bank account, as the bridges connect blockchain networks to traditional financial systems, allowing you to transfer your USDC without intermediaries.
One thing to consider is that stablecoin bridges are typically designed for specific stablecoins and may need complex development. If you're using a different stablecoin, you may need to convert it first, which you should keep in mind if you plan to withdraw another asset to your bank account. Fees may vary and be higher than other methods, especially for smaller withdrawals.
Step-by-Step Withdrawal Process
In this section, I'll show you how to transfer USDC to bank account using a centralized exchange, crypto wallet, and P2P platform. Using a bridge often requires a complex deployment that can be challenging for non-technical users (so I'll just skip this option).
When it comes to using USDC with a crypto debit card, you just need to get a card, have some USDC in it, and use it just like you would use your usual debit card.
Now, the withdrawal process with the three methods I'll talk about further is generally simple, with clear instructions and minimal technical requirements. So, even users with minimal technical knowledge should be able to follow.
How to Cash Out USDC on a Centralized Exchange?
Before you follow these steps on how to transfer USDC to bank account with centralized exchanges, make sure to complete the identity verification process. Usually, it involves providing identification documents, such as a passport or driver's license and proof of address. In this section, I'll show you how to cash out USDC with Binance and Coinbase.
Cashing Out USDC With Binance
Binance offers a straightforward process to cash out your USDC holdings:
Step 1: Check if the exchange lists a trading pair where USDC can be traded against your preferred currency on the "Markets" page.
Step 2: Go to the “Trade” section on the Binance website and select “Spot”.
Step 3: Type in your preferred fiat currency on the provided search bar in the ticker. You should be able to find the USDC trading pair for your local currency – click this option.
Step 4: Now, navigate to the “Buy” section. You can either use a limit or a market order. If you want to complete the order as soon as possible, I suggest you choose a market order. With this option, the exchange estimates how much you’ll receive for selling the specified amount of USDC.
Step 5: After your trade is complete, go to your spot wallet on Binance, where you should be able to see your local currency balance.
Step 6: Choose “Withdraw” and click “Withdraw Fiat”.
Step 7: You should see the “Withdraw Fiat” page presenting different methods to withdraw the money to your bank account. Keep in mind that the options available are different based on the chosen fiat currency.
Step 8: Enter the amount you’d like to transfer to your bank account. Check all the information before pressing the “Continue” button.
Step 9: If everything is correct, click the “Confirm” button.
Depending on your Binance account settings, you may be asked to scan a QR code with the device that stores the passkey for your Binance account.
If you’ve never used the chosen bank account with Binance, you may need to deposit a small amount of money from that account to Binance so that the exchange can verify the bank account. The Binance team notifies you when the bank account verification is confirmed.
Cashing out USDC With Coinbase
Besides Binance, Coinbase can be an option to cash out your USDC holdings. It offers a user-friendly interface and a variety of withdrawal options. Follow along with this guide on how to cash out USDC on Coinbase below via the mobile app, from selling the asset to turning it into a fiat:
Step 1: To cash out your funds, you first need to sell your crypto for cash. So, click “My assets” and select the crypto you want to sell for cash.
Step 2: Select USDC and tap on “Sell”.
Step 3: Enter the amount you want to sell and choose where you want to send it. The options include PayPal and fiat wallets on your Coinbase account. I chose to send the funds to my GBP wallet. Then, click on the “Review order” button.
Step 4: Ensure the details are correct and press “Place order” to complete the transaction.
Step 5: Once you’ve sold the USDC, let’s cash out the funds by going to “My assets” and clicking the amount that shows the fiat currency (in my case, it's the "British Pound").
Step 6: Tap on “Cash out”.
Step 7: Select your withdrawal method. If you haven't added your bank account, click "Add a payment method", and you should see options based on your country and chosen currency. Follow the on-screen instructions to add the payment method – it generally involves inputting your bank account name and number.
Step 8: Once the method is listed, enter the amount of fiat you want to withdraw and click the “Preview cash out” button.
Step 9: Make sure the details are correct and click “Cash out now” to finish the withdrawal process.
After you’ve done the steps on how to cash out USDC on Coinbase, wait for a notification when the cashout request is complete.
How to Cash Out USDC on a Crypto Wallet?
Besides using centralized exchanges, you have another option when learning how to transfer USDC to bank account: using a crypto wallet. Note that this option often doesn't let users withdraw holdings directly from the wallet to a bank account. You often need an intermediary (e.g., an exchange or payment system) to facilitate the process.
In this tutorial, I’ll show you how to send USDC to your bank account from the Ledger Live app. Ledger offers several ways to cash out USDC: using Discover apps like Ramp, Bitply, and BTC Direct or sending the crypto to an exchange and converting it to fiat there. I think the first option is the easiest, so here's the step-by-step guide to follow:
Step 1: Navigate to the "Discover" section of Ledger Live and click "BTC Direct".
Step 2: Click "Continue", and then “Sell”.
Step 3: Select the currency you want to sell and its amount displayed in the "Create order" window. After you enter the amount you want to sell, you should see the amount you'll receive automatically.
Step 4: Enter your bank account IBAN and click "Preview order".
Step 5: Make a BTC Direct account if you don't have one. If you already have an account, simply sign in by typing in your name, email address, and password.
Step 6: The address for sending the USDC holding is displayed on the screen. Click "Send" to send the crypto to the given address and paste the provided address.
Step 7: Check the transaction details and press "Send".
Step 8: Connect and unlock your Ledger device and open the "Exchange app".
Step 9: Verify the transaction details on your device and press both buttons simultaneously to accept and send the transaction.
The selling process should be about the same across all Ledger devices, so you can follow the steps with any Ledger wallet. Note that BTC Direct only supports transferring crypto to EUR. Therefore, if you wish to send to another currency, consider other methods (e.g., sending USDC to an exchange first and withdrawing the asset to your bank account from there).
How to Cash Out USDC on a P2P Platform?
In this section, I’ll show you how to cash out USDC using Bitget's P2P platform (though you can do that similarly on other P2P services, like Binance P2P, too). Besides the straightforward process, it supports many fiat currencies and payment methods that are relevant to the chosen fiat.
For example, users who want to sell in USD can choose a US-based payment processor like Utoppia, while those transferring to IDR can use local Indonesian banks or online payment services like GoPay and Bank Mandiri.
Note that you must verify your identity, email address, and phone number to withdraw your USDC with Bitget.
Here are the steps on how to transfer USDC to bank account using the Bitget website:
Step 1: Go to the P2P asset selling page and choose USDC as the cryptocurrency you want to sell. Select your preferred fiat currency and payment method to see a list of partners that can help you with the transaction, along with their limits, fees, and payment options.
Step 2: Click the “Sell” button on the partner you want to trade with.
Step 3: Enter the amount you’d like to sell – you can input by USDC or fiat. Once you’re all set, press the “Sell USDC” button.
Step 4: Pick a payment method the buyer uses to pay into your account. Note that the availability depends on several factors, like the merchant and fiat currency you choose. Tap “Confirm sell” to proceed.
Step 5: Once everything is done, wait for the payment to be made by the buyer. Ensure the money has been successfully deposited in your account when the buyer marks the transaction as successful.
Step 6: After verifying that the buyer has deposited the funds, tap the “Release” button. A small pop-up appears for you to enter the fund password.
By following these instructions on how to transfer USDC to bank account with a P2P platform, you should successfully have some cash in your pocket. If you use Bitget, remember to choose a reputable partner by examining the badge icon beside the username.
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Things To Consider While Cashing Out USDC
When learning how to transfer USDC to bank account, it’s important to carefully consider various factors to ensure a smooth and secure process. In this section, I’ll talk about key considerations to keep in mind when withdrawing USDC to your bank account, including security best practices, fee structures, and regulatory compliance.
Fees and Transaction Times
The fees for withdrawing USDC to a bank account can vary depending on the platform and the bank transfer method you choose. Generally, there are three types of fees you may need to pay when getting to know how to transfer USDC to bank account:
- Network fees
- Platform fees
- Bank fees
Platform fees are typically charged when you use a centralized exchange or P2P platform. Depending on the exchange, fiat currency, and withdrawal method, they can range from 0.1% to 5% or more.
Meanwhile, network fees are applicable when you use decentralized exchanges or stablecoin bridges, paid to blockchain miners for processing transactions and may vary based on network congestion.
When using DEX with your crypto wallet, you usually pay gas fees to cover the computational costs of processing transactions on the blockchain. Moreover, if you're using a stablecoin bridge to withdraw USDC, the bridge provider may charge you a fee.
Another one is bank fees. Your bank may charge fees for receiving international wire transfers or processing large transactions. This is especially relevant if you're withdrawing USDC to a bank account located in a different country. The fees charged by your bank can vary depending on your bank's policies, the amount of the transaction, and the currency involved.
As you learn how to transfer USDC to bank account, note factors affecting withdrawal fees. The main variable is the withdrawal amount. Larger withdrawals often result in higher costs because processing larger transactions requires more computational resources and network bandwidth.
Also, fees may influence the transaction times. Higher fees often correlate with faster transaction speeds, while lower fees may result in longer processing times.
When you pay a higher transaction fee, you incentivize miners to prioritize your transaction over others. Miners are more likely to include transactions with higher fees in the next block they create, which can lead to faster confirmation times.
Besides miner preferences, network congestion is crucial in determining transaction fees and times. Transaction fees tend to increase when a blockchain network experiences high activity, and confirmation times can be longer.
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Security
USDC is considered one of the safest fiat-backed stablecoins (fsCOINs) reserves.[2] However, there are some potential security risks when cashing out USDC.
Among the most prevalent security threats is phishing attacks. Phishing scams are a common tactic cybercriminals use to trick users into revealing their personal information or login credentials.
To prevent phishing attacks, be cautious of unsolicited emails, messages, or calls claiming to be from legitimate platforms, and never click on links or download attachments from unknown sources.
It’s also important to verify the legitimacy of the platform you use to practice what you’ve learned about how to transfer USDC to bank account. Using unverified platforms can result in financial losses, so beware of fraudsters who offer suspiciously low transfer fees. Before deciding on a platform, research its reputation and look for signs of legitimacy, such as regulatory compliance and customer support.
To further protect your funds, I recommend you follow these security tips:
- Use strong and unique passwords for all your online accounts, including crypto exchange and bank logins.
- Enable two-factor authentication (2FA) for added security.
- Avoid using public Wi-Fi networks for sensitive transactions.
- Ensure your operating system, web browser, and antivirus software are up-to-date.
These security practices can help you reduce the risk of falling victim to phishing attacks and other security threats when cashing out USDC.
Regulatory Compliance
As you may have noticed, the crypto industry has witnessed a surge in growth and adoption in recent years. Research by a payment provider named Triple A showed more than 560 million crypto owners worldwide. This growth then increases the regulatory scrutiny from financial authorities, such as the Securities and Exchange Commission (SEC) and the Financial Action Task Force (FATF).
These regulatory bodies have implemented various initiatives to address concerns related to consumer protection and the prevention of illicit activities.
One key measure is KYC and AML regulations. These procedures require businesses to identify and verify their customers' identities to prevent money laundering and other prohibited activities.
Complying with these laws is a critical factor for cryptocurrency platforms, as failure to adhere to applicable laws and regulations can result in legal consequences, like fines, penalties, or even business closures.
So, what are the impacts of regulatory compliance on the steps involved in how to transfer USDC to bank account?
- Regulatory requirements may limit the withdrawal options and amounts.
- Cryptocurrency platforms may have geographic restrictions, limiting the availability of their services to certain regions.
- Different regulatory frameworks can impact the availability of withdrawal options – some countries may have stricter regulations or outright bans.
- Specific crypto platforms may have higher fees because they need to invest in compliance measures, such as hiring compliance officers or implementing specific fee structures to comply with anti-money laundering regulations.
All of these impacts can ultimately influence your USDC withdrawal process.
- Very low trading fees
- Exceptional functionality
- Mobile trading app
- Very competitive trading fees
- An intuitive mobile app
- Up to 100x leverage available
- A very well-known crypto exchange platform
- More than 500 different cryptos available
- Two-factor authentication
- Over 500 different cryptocurrencies available
- Strong security
- Small withdrawal fees
- Secure and reliable
- Low fees
- A good amount of fiat currencies accepted
- Reputable exchange
- Multiple fiat currencies are accepted
- Relatively low trading fees
Tax Implications
Besides fees and geographic restrictions, regulatory compliance can have tax implications regarding how to transfer USDC to bank account.
For instance, you may trigger capital gains tax when you withdraw USDC and convert it to fiat currency.
For US residents, the IRS treats cryptocurrency as property for tax purposes, meaning that any profit or loss from the sale or exchange of USDC is considered a capital gain or loss.
The amount of money you have to pay usually depends on the tax basis of your USDC (the original cost or acquisition method), whether you purchased, mined, or airdropped the asset.
Besides the acquisition method, the tax rate for capital gains generally depends on how long you hold the USDC. Short-term gains (held for less than one year) are taxed as ordinary income, while long-term gains (held for one year or more) are subject to lower capital gains tax rates.
Based on the information I gathered, US residents need to report their crypto transactions on the federal income tax return, using Form 8949 to report capital gains and losses.
Meanwhile, non-US residents holding or trading USDC may also be subject to US tax on their cryptocurrency gains, depending on their level of engagement with the US tax system.
If you are a foreign person who owns a US real estate investment trust (REIT) that holds USDC, you may be subject to the Foreign Investment in Real Property Tax Act (FIRPTA).
On the other hand, those who are a foreign financial institution with US account holders may be subject to the Foreign Account Tax Compliance Act (FATCA) reporting requirements, which require you to report information about US account holders to the IRS.
It's important to consult with a tax professional to determine your specific tax obligations and reporting requirements. They can guide the applicable tax laws and help you ensure that you comply with all relevant regulations.
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Conclusions
When learning how to transfer USDC to bank account, you’ll find different methods, each with its own advantages and disadvantages. Centralized exchanges, crypto wallets, P2P platforms, stablecoin bridges, and cryptocurrency debit cards offer varied levels of convenience, security, and fees.
Therefore, the best method depends on your location and preferences – the specific features you require, the level of security you prioritize, and the fees you're willing to pay.
For example, withdrawing USDC using a centralized exchange like Binance may be more suitable for those prioritizing security and regulatory compliance. Meanwhile, people who want to have more options for local fiat withdrawals can try a P2P platform (offered by Bitget or other reputable crypto exchanges).
Pro tip: When deciding how to cash out USDC, remember to prioritize security and avoid falling victim to scams by verifying the legitimacy of the platforms you use.
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
Scientific References
1. A. Díaz, C Esparcia, D. Huélamo: 'Stablecoins as a Tool to Mitigate the Downside Risk of Cryptocurrency Portfolios';
2. J. E. Marthinsen, S. R. Gordon: 'Synthetic Central Bank Digital Currencies and Systemic Liquidity Risks'.
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