Selling your Bitcoin – Things to Consider 2


When I posted my article about buying Bitcoins last time, I got numerous questions asking about selling them instead. Truth be told, all the gains you have when putting your funds in Bitcoin are only worth as much profit on paper. You can only lock in those profits when you decide to get out and get to selling your Bitcoin.

Selling your Bitcoin is pretty simple; in fact, it’s a simple click of a button most of the time. What most people are worried about is after selling your Bitcoin, you have fiat (a.k.a. normal money) in your trading account. How would you get it out?

But before that, as usual remember:

Bitcoin, altcoins and other forms of cryptocurrency are extremely Speculative and Volatile markets. Security is also in the early stages so potential theft and unrecoverable losses CAN occur. As such, it’s up to you to do your due diligence and research before going into it. And never, ever put in more money than you are willing to lose.

I repeat:

It is possible to lose ALL the money you put in!

Selling your Bitcoin

As I mentioned, selling your bitcoin is a simple click to sell when you decide it’s time:

Online

You either transfer your Bitcoin from your wallet to the trading account or you’ve left your coins sitting there all this while (super risky move). Regardless, you can try to predict the price movement and set a Limit Order to sell at a certain price point; or you just sell at market rate at that time.

In person

Alternatively, you could sell your coins to someone else for cash. This way simply mitigates all the extra steps except for some problem you may encounter (more below).

Congratulations! If your order has gone through, you’ve now (hopefully) have made a tidy profit. The next question is…

How to get your money into your bank account?

If you bought from Coinmama or even through a local seller, this is where it’s a little bit troublesome. Sure, if you sold to someone else for cash, it’s simple as that. But if you want to do it digitally on a wider market, you really need to sign up for a cryptocurrency exchange account which allows you to convert cryptocurrency to fiat.

The only exchange I’ve used for this is Bitstamp but there are numerous others to explore on your own. If you have used Bitstamp, you would have encountered the option of transferring your fiat from your bank to Bitstamp. Well, the opposite works too; in fact, that’s how you get your money back! However, Bitstamp enforces a rule that you can only transfer fiat to an account in your name as a security measure. You simply select withdraw, key in your bank details and proceed. It will be processed and your money will be deposited into your account.

To date, I have not heard of anyone having any problems withdrawing their fiat. It could be because my circle who are interested in Bitcoin is just really small, though.

But is it safe?

Many people wonder if it’s safe to transfer your investment proceeds back into your bank account. If you didn’t consider it safe to transfer out to invest, why would you do it in the first place? But I do understand there are some exchanges with historical practices of freezing accounts. This can be easily mitigated by doing your initial research when picking an exchange.

Many big name exchanges with independent user-reviews tend to be consistent with their policies and dealings. There’s no way to know for sure they won’t pull an MT Gox or NiceHash so you only have yourself to trust to take your cryptocurrency out into your wallet for cold storage.

But is it legal?

I’ve mentioned in the previous post that AMBD has a neutral stance towards cryptocurrencies. They even seem to encourage keen developers to look into FinTech by creating a FinTech office complete with guidelines for testing. You can look into the tech, but obviously have to play by their rules.

Legality

But in terms of the legality of Bitcoin and other cryptocurrency, I can safely say they’re NOT illegal in Brunei for the time being. Think about it, the cryptocurrency market is similar to a stock market in the sense that you would want to invest and hope the value rises.

But the stock market has something the cryptocurrency world doesn’t though: regulation and history. People believe in the stock market more because it has been around for a long time. Generally, we fear the unknown and blockchain tech is our current unknown here. Add on the fact that Bitcoin is more like a Wild West setting of the investment vehicles, it’s no wonder some outright avoid it.

What I mean by the Wild West is that there’s no regulation in the cryptocurrency markets, there’s no one to turn to for filing a report for a scam or complaint; you’re literally on your own (save for others like you). Personally, I believe that regulation will come in when these digital coins start to become adopted more widely; just like how our current system is built up.

Taxation

Policymakers in other countries particularly the United States are playing catch-up for dealing with Bitcoin and the like. This is because their personal income and capital gains taxation laws do not (yet) include those that come from cryptocurrency. I think Uncle Sam definitely wants his piece of the pie as more and more people are jumping onto the crypto-train.

However, in Brunei we do not have these kinds of laws in place so for one thing, you don’t have to worry about losing a cut of your profits.

Suspicious Transactions

Cryptocurrencies also have a bad reputation of being tied to dodgy dealings. This includes black market transactions and money laundering because of their element of anonymity. AMBD is well aware of this; as such, transacting using cryptocurrency is listed as one of the elements that flags a suspicious transaction. This means literally using Bitcoin to pay for something, not selling it for profit.

So how does that affect you?

Well for one scenario, you may have someone from the bank call you up to ask about receiving a sum of money in your account. Worst case scenario, as I usually say, is that you may be required to prove where the money comes from. It’s may be as simple as showing them:

  1. Your initial investment going in.
  2. Price you entered.
  3. Price you exited.
  4. Profit you gained.

So far, there’s nothing wrong with playing the market at your own risk. And if your profits are legitimate (and I’m assuming they are), it should be easy to explain. Coupled with the timestamp on the blockchain, you can easily access proof of your transactions.

Conclusion

Selling your Bitcoin can be easily done through an exchange. If sold in person, it is even easier and can even be more profitable due to marking up the prices. FinTech is an interesting development that seems to be encouraged by our regulators within reason. Still, there are some policies and regulations in place to detect illegal dealings such as money laundering. Regardless, any legitimate profits from financial markets should not see much (if any) problems when bringing the money back into Brunei.

Happy and safe investing everyone!

Financial institutions play a vital role in reporting any transaction or attempted transaction that is suspected to be related to any criminal offence including money laundering and terrorist financing, to the Financial Intelligence Unit (FIU), Autoriti Monetari Brunei Darussalam.

AMBD Guidelines for Financial Institutions to submit Suspicious Transaction Reports

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About Fox

Founder of The Savey Fox. I am interested in how money works and makes the world go round. Borne from picking up a personal finance book when I was unemployed after University, I strive to continually learn and share about finance. Other than the big $ signs, I am an avid gamer, coffee lover and seasonal gym rat.


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2 thoughts on “Selling your Bitcoin – Things to Consider

  • Awang Bodyman

    Hello, I’ve signed up and had my Bitstamp account verified. I tried to deposit cash into my account with my credit card, but it declined the card. My questions would be:
    1) How do I exactly deposit cash into my Bitstamp?
    2) Do I transfer the cash to my bank account by selecting International Wire Transfer option in the Withdrawal menu?

    • Fox Post author

      Hey there Awang Bodyman.

      Yes, you are correct. What I did was using International Wire Transfer and following the instructions. Be sure to copy the correct message when you the initiate bank transfer as Bitstamp uses that to know which account to credit into. Of course, this is considering you’re looking to buy crypto.