How to send bitcoin to any bank account and cash out ICO proceeds
While more and more Initial Coin Offerings (ICOs) emerge these days, the recently funded companies face the very obstacle that has haunted the Blockchain industry since the start – cashing out cryptocurrencies into a bank account. We built Bitwala in the heart of the German Blockchain community in 2015 to solve this very problem in a smooth and secure way. In this blog, we talk about how companies can focus more on making their roadmaps come true and less on worrying about cashing out crypto.
Whether a recent ICO or an established crypto business – it can be very frustrating for crypto companies to transfer their hard-earned cryptocurrencies into fiat currency. We know this because we’ve run into the same problem as a crypto business ourselves.
Collecting and securing funds during an ICO
Most companies doing ICOs collect their funds in Bitcoin, Ethereum, Litecoin and also in traditional fiat currencies like the Euro or US Dollar. Cryptocurrencies that are collected are then usually converted and cashed out into a fiat currency of choice.
At the time of writing, the total amount of money raised from ICOs has reached over $3.45 billion, from a total of 211 ICOs that took place this year.
Regardless of the amount collected in crypto, you will be faced with making settlements in fiat currency, be it to your legal team, rent, other third parties or even those late night pizza deliveries. While there are smart contracts, advertising and legal firms which accept payments in Bitcoin or other cryptocurrencies, for example, most third parties, not to mention probably your own employees, demand payment in local currencies.
The struggle is real
As a newly funded crypto company looking to send bitcoin to your bank account, you will encounter some (if not all) of the following frustrating scenarios.
Option 1 – Cashing out your crypto via a traditional bank
After collecting your funds, you decide to open a bank account. It is already problematic as a number of major banks have refused to serve bitcoin businesses in the first place, not to mention that the head of one of the biggest banks in the world declared Bitcoin a fraud.
If you find a hipster bank in Switzerland, Gibraltar, Malta or another European or Asian country, it will take you months of legal deliberations and paperwork filing to comply with the constantly changing and elusive rules. After all, banks are conventional institutions and won’t understand cryptocurrencies and blockchain. When you succeed at setting up an account, you quickly find yourself living in fear of being shut down at any moment.
What’s a bigger problem is that banks require ICOs to verify and KYC virtually every transaction. In other words, if you have 1000 ICO investors you will need to prove to the bank that the funds that these investors contributed, big or small, came from legitimate sources. If done ahead of a sale, this comes at the expense of a seamless participation campaign.
Lastly, some banks only deal with a so-called “whitelisted” number of exchanges. And to get on one of these, according to our customers, is a complicated story of its own which we describe below.
Option 2 – via an exchange
To open an account at a local exchange, you have to overcome several hurdles. First of all, you usually have to have a bank account – see Option 1. You also have to find a suitable exchange that operates in your local currency and jurisdiction. Once you are accepted as a client (after a long verification period), the waiting times and fees are still relatively high. Last but not least, there’s the risk of an exchange being hacked or going offline – which has happened dozens of times in the past.
The common denominators when trying to send bitcoin to your bank account are high barriers to entry, repetition of tedious KYC steps, slow speed and expensive prices. You can’t transfer to someone other than yourself via an exchange. With a bank, you always have the threat of having your account shut down at a moment’s notice or not being allowed to open one in the first place.
Easily cash out your ICO proceeds
Amongst the plethora of companies that offer bitcoin to bank account money transfers, we at Bitwala lead the race by providing a fast, powerful and secure platform for businesses worldwide to cash out ICO proceeds.
Through the Bitwala platform companies doing ICOs can send their cryptocurrency proceeds into over 20 local currencies globally, including GBP and EUR to settle invoices and payments at a low 0.5% fee.
Built specifically for crypto companies, our business accounts enable ICOs to cash out their proceeds with no limits. Businesses can centralize their cash management through payment processes that are instant, consistent, and standardized at no hidden cost.
At Bitwala we always strive to build products for the ever-expanding crypto economy and are honored to have served more than 60,000 business and private users to date!