Selling Bitcoin on Cash App is a straightforward process that allows you to convert your Bitcoin holdings into fiat currency, like US dollars. Here’s a closer look at what happens when you sell Bitcoin on Cash App and some key factors to keep in mind.
How Selling Bitcoin on Cash App Works
When you sell Bitcoin on Cash App, here are the key steps in the process:
You Initiate a Sell Order
- Open the Cash App Bitcoin page and select the “Sell” option.
- Enter the amount of Bitcoin you want to sell (can choose from preset amounts or enter a custom amount).
- Review the quoted USD amount you’ll receive for the BTC sale.
- Confirm the details and place the sell order.
Cash App Converts Your Bitcoin to USD
- Once you place the sell order, Cash App takes your Bitcoin out of your Bitcoin wallet on the app.
- Cash App then converts the Bitcoin to USD at the current market exchange rate.
- The USD funds are deposited into your Cash App fiat wallet.
The USD Funds Appear in Your Cash App Balance
- After the BTC/USD conversion completes, the USD funds from the sale show up in your Cash App fiat wallet balance.
- This usually happens instantly, but can take up to an hour in certain cases.
- You can then cash out the USD funds to your bank account or spend on the Cash Card.
Tax Implications of Selling Bitcoin
When you sell Bitcoin on Cash App, it can trigger capital gains taxes if you’ve made a profit on your original purchase price. Here are some key tax considerations:
- Capital gains taxes – In the US, Bitcoin is treated as property for tax purposes. When you sell BTC at a higher price than you purchased, you have a capital gain, which is taxed. The tax rate depends on how long you held the Bitcoin. Short-term gains (held less than one year) are taxed as ordinary income. Long-term gains (held over one year) are generally taxed at a lower long-term capital gains tax rate.
- Cost basis – Your cost basis is the amount you paid when purchasing the Bitcoin you are selling. Cash App provides Form 1099-B at tax time which includes your cost basis amounts to help calculate capital gains.
- Loss deductions – If you sell Bitcoin at a lower price than your purchase price, you can claim that capital loss as a tax deduction (with certain limitations).
- State taxes – Some U.S. states also tax Bitcoin capital gain earnings, in addition to federal taxes.
Transaction Fees for Selling Bitcoin
When you sell Bitcoin on Cash App, a small transaction fee is taken from the sale proceeds. Here are the fees to expect:
- Cash App charges a 1.75% transaction fee for standard Bitcoin sells of $100 or more.
- For smaller BTC sells under $100, Cash App charges a flat $0.25 fee.
- The fee is deducted from the USD amount you receive when you sell your Bitcoin.
- There are no fees for depositing Bitcoin into your Cash App wallet. Only selling incurs a fee.
- Cash App provides a detailed transaction history showing the fees paid on each BTC sell transaction.
Instant Access to Funds After the Sale
A key benefit of selling Bitcoin on Cash App is that you gain instant access to the USD funds after the sale is complete.
- The USD from a BTC sale is deposited into your Cash App fiat wallet balance immediately after the transaction.
- You can then instantly spend that balance using your Cash Card or transfer it to your linked bank account.
- This provides a quick way to liquidate your Bitcoin holdings into usable cash at any time.
- Selling on a cryptocurrency exchange can take longer to settle and access fiat funds.
Setting Up Bitcoin Selling Access
Before you can sell Bitcoin on Cash App, you need to go through a verification process to gain access:
- Enable BTC buying – You first need to buy Bitcoin on Cash App and hold a balance to gain access to sells.
- Verify identity – You must complete identity verification by providing personal info and documents.
- Enable Bitcoin withdrawing – Request access to Bitcoin withdrawing to link an external Bitcoin wallet address.
- Wait for review – Cash App reviews your account activity and verifies your info before approving BTC selling. This can take up to several weeks.
Daily and Weekly Selling Limits
Cash App places limits on how much users can sell in a time period, which may require spreading larger sales over a few days/weeks:
- Daily selling limit – Maximum of $10,000 worth of BTC can be sold in one calendar day.
- Weekly selling limit – Maximum of $25,000 worth of BTC can be sold in one calendar week (Mon-Sun).
- 30 day limit – Can sell up to $50,000 worth of BTC across all transactions in a rolling 30 day period.
- Increase limits – Verify identity again and request higher sell limits after reaching base limits.
Why Sell Bitcoin on Cash App?
Here are some of the advantages of using Cash App to sell Bitcoin compared to other options:
- Simple interface – Easy to manage BTC sells alongside fiat funds in one app.
- Instant sale – BTC is instantly converted to USD upon sale completion.
- Fiat wallet – USD from sales can be stored in your Cash App account and spent or withdrawn.
- Low fees – Cash App’s transaction fees are lower than many exchanges and brokers.
- Beginner friendly – Simpler to get started selling Bitcoin vs. exchanges which can be complex.
- Customer support – Cash App provides customer support for any issues with transactions.
Risks When Selling Bitcoin on Cash App
While selling Bitcoin on Cash App offers convenience, there are also some risks to consider:
- Volatility – Bitcoin’s volatile price swings mean you may not get an optimal sale price.
- Account security – As with any Bitcoin storage, you must take steps to protect your Cash App account from unauthorized access.
- Loss of funds – There is no reversible transactions – accidental or incorrect Bitcoin sends will result in permanent loss of funds.
- Tax headache – May need to do significant record keeping on cost basis and capital gains for tax reporting.
- Third party reliance – You must rely on Cash App’s systems being online and operational to access or sell your Bitcoin.
Selling Alternatives to Cash App
If you decide Cash App isn’t the right fit, here are some other popular options for selling Bitcoin:
- Cryptocurrency exchanges – Exchanges like Coinbase, Gemini and Kraken allow selling Bitcoin for withdrawal into a bank account. Generally lower fees than Cash App but can be more complex.
- P2P marketplaces – Platforms like Paxful and Bisq allow selling Bitcoin directly to buyers while avoiding centralized exchanges. Provides more anonymity but higher fraud risk.
- Bitcoin ATMs – There are thousands of Bitcoin ATMs that allow selling BTC for cash. Convenient but have high fees around 10% on average.
- In-person sales – You can sell Bitcoin face-to-face for cash through classified ads or online marketplaces. Harder to coordinate safely at scale.
- Decentralized exchanges – DEXs like Uniswap allow trading Bitcoin in a non-custodial manner. Advanced functionality but only interacting with other crypto assets.
Conclusion
Selling Bitcoin on Cash App provides a quick and convenient way to liquidate your BTC while keeping both currencies within one simple app. Just be aware of potential volatility, security risks, and tax implications. Evaluate your motivations and options for selling to decide if Cash App meets your needs or if utilizing a cryptocurrency exchange or other method is a better fit.