When a company operating in the realm of cryptocurrency and blockchain wants to launch a new project, they generally initiate an initial coin offering (ICO). An ICO works much like the crowdfunding process, where passionate buyers are looking to invest in the offering to help get the project off the ground.
In exchange for their investment in the ICO, the buyer will receive a cryptocurrency token that either has a particular functionality within the project or simply serves as a share in the company. Like with all new business ventures ICO’s don’t always pay off. But when they do, they can shoot right off the chart, leaving the company with enormous returns.
ICO returns to fiat currency
While accepting payment in the form of cryptocurrency is gaining popularity with some forward-thinking organisations, most vendors will only accept fiat currency (AUD). Even if you have a wallet bursting with various crypto coins from your successful ICO launch, you’ll find that it’s almost impossible to pay your day-to-day bills without cashing out. So how do you cash out your ICO returns so that you can actually use it?
Use a trusted exchange
To convert your hard-earned ICO returns into something that you can actually spend, you will need to use a trusted exchange that accepts and deals in Australian dollars. You will be required to link a bank account to your profile for the fiat currency to be transferred into. Exchanges such as CoinSpot, BTC Markets and Independent Reserve are highly recommended for cashing out your ICO’s as they utilise the most advanced security measures and offer low transaction fees.
If you use a wallet that is independent from the exchange, you will need to move your funds onto the exchange and then sell your tokens. Request fiat money on withdrawal rather than trading for another cryptocurrency. Your fiat money will then be deposited into your designated bank account.
Cash out smaller amounts
Although cryptocurrency and crypto-based investments are considered legitimate sources of income, they still tend to be prominent on the Australian authorities radar. The taxation office keeps a close eye on all large-scale transactions to ensure that they are not products of criminal activity and to ensure that the appropriate capital gains tax is being paid.
If you attempt to withdraw very large sums of fiat currency out of your exchange, it is likely that you may pique the interest of authorities and have to go to the ends of the earth to prove the legitimacy of your earnings. It is recommended that you avoid that hassle all together and instead cash out smaller, more regular amounts of your ICO proceeds. You should cash out enough to cover the needs of your project such as staff salaries, rent and so on, but not so much that you’ll find yourself on the authorities radar.