You can convert bitcoin to regular money and move it to your bank, but it requires selling your bitcoin first
Bitcoin lives in a separate financial system from your bank account. Your bank account holds dollars (or your local currency) managed by a bank. Bitcoin is a digital asset you hold in a digital wallet. To get money from bitcoin into your bank account, you need to sell the bitcoin on a platform that connects to the banking system, then transfer the dollars that result.
The process has three parts: sell your bitcoin for dollars on an exchange, wait for the sale to settle, then move those dollars to your bank. Each step takes time, and each step involves a company that is not your bank.
The speed and cost depend on which exchange you use, which bank you use, and what country you are in. Some exchanges move money faster than others. Some banks accept transfers from crypto exchanges more readily than others. There is no single timeline that applies everywhere.
Key Takeaways
- You must sell your bitcoin on a cryptocurrency exchange before any money can move to your bank account.
- The exchange converts your bitcoin to dollars and holds those dollars temporarily while the sale settles.
- You then request a withdrawal from the exchange to your bank account using your routing number and account number.
- The entire process typically takes three to seven business days, depending on the exchange and your bank.
- You will owe income tax on any profit you made when you sell, even though you have not received the money yet.
How selling bitcoin on an exchange works
An exchange is a website or app where you can buy and sell bitcoin. Common exchanges include Coinbase, Kraken, and Gemini. To sell, you log in, find your bitcoin balance, and place a sell order. The exchange matches you with a buyer and converts your bitcoin to dollars.
The dollars sit in your exchange account, not in your bank account. The exchange holds them temporarily. This is called the settlement period — the time it takes for the sale to be final and the dollars to be yours to withdraw. Settlement usually takes one to three business days, though some exchanges are faster.
During settlement, the exchange is holding your money. This is normal and legal. The exchange is a licensed money services business (in the United States) or a regulated financial company (in other countries). Your dollars are there; you just cannot move them yet.
Moving dollars from the exchange to your bank
Once settlement is complete, you can request a withdrawal. You will need your bank's routing number and your account number. You can find both on a check, or call your bank and ask. The exchange will ask you to enter these details and confirm the amount you want to withdraw.
The exchange then sends the money to your bank using the ACH system (Automated Clearing House). ACH is the same system your employer uses to deposit your paycheck. It is slow but reliable. ACH transfers typically take three to five business days.
Some exchanges offer faster withdrawal methods, like wire transfer, but wire transfers usually cost money — often $15 to $25 per transfer. ACH is free. If you are not in a hurry, ACH is the cheaper choice.
Fees you will pay
Exchanges charge a fee when you sell bitcoin. This fee is usually between 0.5% and 2% of the amount you sell, depending on the exchange and how much you are selling. A smaller sale might cost 2%; a larger one might cost 0.5%. Check the exchange's fee schedule before you sell.
If you use a wire transfer instead of ACH, the exchange charges a wire fee. ACH has no fee. Your bank might also charge a fee to receive a wire transfer, though most banks do not charge to receive ACH transfers.
You will also owe income tax on any profit. If you bought bitcoin for $10,000 and sell it for $15,000, you owe tax on the $5,000 gain. You owe this tax even though you have not received the money yet — the tax is due when you sell, not when the money arrives in your bank. Keep records of what you paid for the bitcoin and what you sold it for.
Why your bank might reject the transfer
Some banks are cautious about cryptocurrency exchanges. A few banks have policies against accepting transfers from crypto companies. This is rare, but it happens. If your bank rejects a transfer from an exchange, you will see an error message, and the money will go back to your exchange account.
If this happens, contact your bank and ask whether they accept transfers from cryptocurrency exchanges. If they do not, you have two options: switch to a bank that does, or use a different exchange (some banks accept transfers from certain exchanges but not others).
Most mainstream banks — Bank of America, Wells Fargo, Chase, and regional banks — accept transfers from major exchanges like Coinbase and Kraken. Smaller or more restrictive banks may not. If you are unsure, ask your bank before you sell.
Timing from start to finish
The fastest timeline is about five business days. You sell bitcoin (when ready), it settles (one to three days), you request a withdrawal (when ready), and it arrives at your bank (three to five days). In practice, most people see seven to ten business days from the moment they decide to sell to the moment the money is in their bank account.
Weekends and holidays slow this down. If you sell on a Friday, settlement might not complete until Tuesday. If you request a withdrawal on a holiday, it might not process until the next business day. Plan for the longer timeline if you are on a important date.
Some exchanges are faster than others. Coinbase and Kraken are generally reliable. Smaller exchanges may take longer. If speed matters to you, check the exchange's withdrawal times before you open an account.
What happens if you need the money back in bitcoin
Once the dollars are in your bank account, they are regular money. You cannot turn them back into bitcoin from your bank account — your bank does not deal in bitcoin. If you change your mind and want bitcoin again, you would need to log back into the exchange, deposit dollars from your bank, and buy bitcoin again. This means paying exchange fees twice and waiting through settlement twice.
If you think you might want bitcoin again soon, leaving it on the exchange (rather than moving it to your bank) might cost you less in fees. But leaving money on an exchange carries risk — if the exchange has a security breach or goes out of business, your money could be lost. This is a trade-off you have to weigh yourself.
Frequently Asked Questions
Can I transfer bitcoin directly to my bank account without selling it first?
No. Bitcoin and bank accounts are separate systems. Your bank cannot hold bitcoin, and your bitcoin wallet cannot hold dollars. You must sell the bitcoin on an exchange to convert it to dollars, then move the dollars to your bank.
How much does it cost to move bitcoin to my bank account?
The exchange charges a selling fee (usually 0.5% to 2% of the amount). ACH withdrawal is free. If you use a wire transfer instead, expect a $15 to $25 fee from the exchange. You will also owe income tax on any profit when you sell.
What if my exchange goes out of business before my withdrawal arrives?
Once the money leaves the exchange and enters the ACH system, it is no longer the exchange's responsibility — it is in the banking system. If the exchange fails after you request a withdrawal, the money will still reach your bank. If the exchange fails before you request a withdrawal, your dollars might be at risk depending on whether the exchange is insured.
Do I have to report this to the IRS?
Yes. When you sell bitcoin, you have a taxable event. You owe tax on any gain (the difference between what you paid and what you sold it for). Keep records of the date you bought, the date you sold, and the price each time. You will report this on your tax return.
Can I move bitcoin to my bank account if I do not have an exchange account yet?
No. You need an exchange account to sell the bitcoin. You will need to create an account on an exchange, verify your identity, link your bank account, then sell your bitcoin and request a withdrawal. This whole process takes at least a few days.