Bitcoin Forum

Hello,friends
The question is more for those who once converted a lot of bitcoins into fiat to their bank accounts
How did you do it so that the tax authorities and the bank manager would not question where the money came from?
The thing is that many years ago i bought my bitcoins from a person in cash and he transferred them to me in my presence
How can i make sure that this money is transferred to my bank card without any problems?

-Regards

Firstly, you are going to need to use a centralized exchange here. Centralized exchange have KYC so they are able to verify your identity and other information. If you are using a centralized exchange and one that has good reputation then the chances of your bank raising questions might reduce.

There’s really no sure way of preventing banks from asking questions without having to show them that you are indeed just transferring some of your money and no illegal activity is happening. However just make sure that when they do raise questions you are equipped with the required documents and hoping you are not evading any taxes because that will surely put you in trouble.

Have you know anything about P2P(peer-to-peer/ person-to-person) trading on exchangers? Like Binance?
I used to do P2P trading on Binance and Kucoin for buying and selling cryptocurrency, Basically I don't but directly bitcoin with fiat currency firstly I buy USDT by fiat then transfer them to spot and buy ever I want. You can also check about P2p trady here-

HOW TO USE BINANCE P2P (http://HOW TO USE BINANCE P2P)

I don't know about other what they do but in my country crypto aren't legalized yet but for p2p trading I haven't face any issue till yet, but I have followed some tricks to skipping them.
I thing the peoples of your locals can say more about this, you can also ask to your local peoples in your local board.
Use P2P trading. And know your region rules.

I believe KYC is not good for OP need.

When you cash out, it's really hard to know that your trade partner has clean money or dark money. No one can knows but you can reduce your risk by choosing trade partners with good past successful trades in both number of trades and trading volume. It can reduce risk to trade with new accounts with money from dark sources.

It is only kind of carefulness and prevention but can not be perfect because if that senior trade partner is from a dark group, who knows what will wait for you. When you trade peer to peer, digitally, you take risk already.

You can easily convert your Bitcoin to fiat using your calculator and after then the best way is to sell your coins on an exchange that is available in your country. There are different exchanges like coinbase, Binance, kucoin that offers these services. Don't get it all wrong these exchanges do not directly buy your Bitcoin or USDT they will match you with a buyer in the exchange through the P2P area there you will see merchants and their prices.  Although the amount of taxes depends on your country of origin.

If you worried your banks will questioning where are the money come from and you can't answer it, you can use CIM (cash by mail) method (https://bisq.wiki/Cash_by_mail), so your money will not be linked to banks.

I don't think you can evade from tax authority, you can temporary hide it if you didn't buy something expensive like house or lambo, but when you buy that, it will raise a suspicion how do you get a lot money when the money in your banks aren't that big. Don't do tax evasion, instead learn tax avoidance.

I agree with your explanation, but the P2P transactions done on exchange doesn't incur tax deduction from the receiver of the fiat, because from my experience, the fiat it's mostly transferred from the bank account of the person you've been paired with by the exchange, so it's basically like a normal cash entering into your bank account, except from the OP's country they deduct tax from any money entering into his account, which I strongly doubt of that kinf of situation.

It depends on what country you are living right now. You don’t have any problem if you are from 3rd world country since bank system on country like mine is not strict when it comes to transactions. You just need to declare as “personal” and bank will consider it as friend transfer.

On the other hand, country like US will not gonna give you a chance to undeclared any transactions since IRS is very strict while the penalties is insane that makes it easier to comply rather than dodge your tax responsibility.

Why would you transfer money to a bank card and complicate everything? Exchange in exactly the same way, but in reverse order: bitcoin  - for money and no one will have any questions for you (unless you start throwing banknotes around :)). Fiat money is 100% anonymous (a financial product of the traditional monetary system) so take advantage of this. Use the services of a well-known exchangers aggregator, because they had the direction of exchanging bitcoin for cash (and vice versa).

When I see advice on using centralized exchangers and KYCs on a forum where they talk about financial freedom and independence, I feel uneasy. :)

If you want to use their services, you will have to play by their rules: banks take your money, and you report to them for every penny and shake so that your account is not frozen.

You shouldn't be asking how to not get questioned by the bank but what answers to give if you get such questions. If Bitcoin is legal in your country, then proceeds from Bitcoin investment sales is a good reason for the sum you would be receiving into your account. You can also exchange in installments, so you don't get one huge sum at the same time;
For example, in some regions, amounts above $10,000 will be queried, but not $9,900 done twice.

Remember to document the txid from when you bought Bitcoin and when you sold.

About tax authorities you may need to speak to an advisor who will guide you on how to fill your tax report. Tax laws vary from country to country and even within states in the same country so you'll need to have accurate information on your tax obligations and possible loopholes that allow you spend less.

If you want to do that, my advice is to process wd to fiat with an amount that is not too noticeable and if at the same time it is not impossible that the bank will ask about all of it with a note to you. Unless you are an entrepreneur who has run a large business and has booked a special customer card from the bank with a large turnover in your account on their platform.

If our people are ordinary people with ordinary account activities, it will be very strange if once money enters our account immediately fat, for example 1 BTC directly. That's pretty big.

I think, if the existing exchange is legal and can get permission, I think it's easy because there is a limit on the level that can be withdrawn daily and for ordinary taxes have been deducted directly when you process the sale of your BTC.

I don't think if other countries like mine that there's a wallet actually recieved an Bitcoin and easy to convert fiat  with lesser fee. But if your plan is converting your Bitcoin into fist and transfer your money to your bank account then like what other said above you need to use a centralize exchange. But you need to fill up some KYC.
But hoping you are in a country that there's an easy way to convert you Bitcoin to your fiat. but if not then you need to transact you Bitcoin using a process.

Selling through P2P is a perfect way to avoid tax, but we need to know that the traction can be tracked if the bitcoin in question was also purchased from Coinbase before the bitcoin price pumped up and there is a little profit gained from that purchase.
 
If it's in the US, where bitcoin and other currencies are taxed just like other properties in the US, if it's purchased from Coinbase, there will be a capital-gained tax attached to it.
 
You might think you have escaped the tax system until the regulatory authorities request your details from the exchange. As Coinbase has been known to be a good complainant, if the regulatory authorities are released, the person will be forced to face tax evasion charges.

If you mean a lot of bitcoins needed to cash out then try to find some local wallets that have either bank or remittance withdrawal options. Then after that ask your relative to sign up some accounts and do certain verification to increase your withdrawal limits so that you can successfully take out your bitcoin balance and you can separate it to multiple accounts so there will be no problem will occur on your side.

I sometimes do this on my local wallet providers and so far I didn't encounter any issue especially on the regulations implemented by government to those financial institutions.

But just make sure that you didn't exceed on the limits and take it slowly so that there will be no question or other suspicious activity will happen on your end and the wallet provider might ask some requirements to verify your transactions. Just do proper planning into this but you can always choose what's more convenient to you since after all there's a lot of suggestion can be used provided by a lot of people here.

Do you sincerely trust that a Bank would NOT ask where the Money came from only because it comes from Binance?  I would definitely not.

The best way is still trying to avoid Banks as much as possible.  If Banks are THAT necessary, maybe use a Bank that is semi Cryptocurrency friendly.

For amounts exceeding ten thousand Dollars, I would expect any Bank to ask me to prove where the Money came from.  It is how Banks operate pretty much.

This works if you don't plan to spend your bitcoin profits on something bigger, but problems start if you wanna buy something like a new car/house/apartment as rarely anyone (at least in Europe) will accept   cash for it.


I heard people mentioning this, but have you actually used this option to sell bitcoin? I am asking becauise imho it seems risky to send money via mail.

Op did not really state which part of the world he is, there are countries right now that they can't use P2P platform base on the restrictions coming from their government in some exchange platforms such as Binance, Kucoin and OkEX, If truly that the money is actually coming from the profit op made from trading Bitcoin and cryptos, and in a case this money is huge and doing a single withdrawal would arise questions about the source of the money, then I suggest that op should do his withdrawals batches by batches or little by little, this way he's going to attract less attention about the incoming funds on his account and avert questioning.

I think think I understand your question very well Op. It's through that there're certain amount of monetary transactions that may occur in a bank account which could attract the attention of the banks management. Literally it's usually huge amount of money that may have not been a usual to that very bank account.
This is a very critical issue but some of us may not know about it. I've heard of so many bank accounts being frozen by the authority because a transaction made of it seems strange and suspicious. So while some governments are being against bitcoin, it's a risk of Investors to sell such huge amount of bitcoin and get the money sent to their bank accounts because it could trigger monitoring of the account which the investors would be questioned. And in such case, the Investor could be in trouble.
So Op, if the government isn't against bitcoin, I don't think if it'd be a problem if you tell the bank the source where the money came from while the clue to escape that questionable fact by the bank is for the Investor to trade the amount of the huge bitcoin sequentially without running the transaction at a one spot.

I think the answer to this question should vary from one county to another, because here in Nigeria, bank accounts are sub divided into more than 3 categories, that is;
1. A kid's bank account, which could accumulate a highest amount from. #10 to #100,000 Naira, with a daily transaction limit of #10,000.
2. A teenager's bank account, which could afford amount from #100,000 to #1million Naira, and lastly
3. An adult or business bank account, which could accumulate from #1million and above (i.e unlimited).
So if by mistake you happen to send money to either a kid or teenager's bank account which has limitations of a certain amount it's likely to accumulate, then in that scenario, you are likely to be asked to come do account upgrade. Which is why here, it's always good to send huge sum of money to these business or corporate bank account. So as to avoid bank managers questioning where the money came from. And this may vary from country to country, so you just have to figure out what works in yours and apply it.

Fiats are unlike Bitcoin that could be checked on the Blockchain, which is why it's always good to use p2p market place, where you only release your coin after you have confirmed payment.

Banks have stopped using the terms; Kid's, teenager and adult account because some people who opened up their accounts when they were teenagers forget to go for upgrades on their account to increase their bank limits when they turn into adults.
Banks now call them "tiers" or "levels". As someone who has a bank account you should know the account level your account is on so that you know the restrictions and limits on your account. If your account is not on a level high enough to accept a big amount of money and you do not want problems you can simply just get someone trusted who has a company account or an account with a higher level or tier so that you can receive your money without any bank challenges or problems.
@OP, the person you are trading with also has to be careful with the description they use in the transaction.

Well, the thing is that if the amount is too much then expect that your account will be locked or questioned, because they might question where did you ge the money so instantly and quickly, well its a common measure so that banks or any platform where you can place your money will know where did you get the money and if its legal or illegal, in my country there are this kind of scenario where in if suddenly you place a very huge amount of money in a bank account or any platform where you can put your money, then expect that they will questioned you and will ask for validation to know if the money came from legal means, because as we know money laundering or any kind of moneh manipulation is can be done in crypto so authorities are being more cautions and strict when it comes to sending and transacting huge amount of money, I still dont experience holding or converting from crypto currency in fiat currency that the amount will be too much.

I don't really know how this applies to all countries, but from my experience of changing Bitcoin and other crypto coins, the tax has been set on the exchange at a percentage.
Let's assume we change 1 BTC for $70k. $70k if exchanged into fiat currency is a large amount that will make the bank suspicious. This can be done in stages [3 to 4 times].
Taxes, we cannot avoid them because all exchanges are under the regulation of legally registered government-owned entities.

The best means to achieve this successfully is in doing it through a decentralized p2p exchange, but making use of a centralized exchange is not ideal enough for us to be able to achieve maximum privacy or evade government regulations, you don't have to specify on the information on your transaction to be crypto transaction in other for you not to be announcing yourself its such you're doing,



It is not difficult to achieve, if you want to make physical p2p transaction, then i will advise that you make use of an escrow service provider that us reliable, while the online one is the decentralized exchange i have to recommend.

It will mainly depend on the crypto laws of your country. Some countries have laws that mandate you to state the source of your income and also pay tax from it. Other countries may not ask where the funds come from but you need to pay tax for it. While other nations are tax-free when it comes to income from crypto. In my country, the government will be asked for the source of the money if it is above $10,000. So dividing the money into lesser funds while exchanging it will make you escape such scrutiny.

When it comes to tax, it will depend on the platform you use to exchange your Bitcoin. If you use a well-established centralized exchange, you may be subjected to tax because they will report your transactions to the government. But if you use a decentralized exchange or through physical P2P like when you bought it, you may avoid tax. But if you are legally mandated to pay tax, there is no need to avoid it. Taxes are an important source of revenue for the government, and without them, basic amenities might not be provided or maintained.

I don't think there's a way to make sure of this as there is no from a to z guidelines available public.

At best, you could only try to mitigate the risks like diversifying the funds to different banks. This may be anecdotal but in my place, its typically the high volume traders getting flagged. You may wanna check on crypto friendly or neutral companies as well.

I also think banks could differ depending on someone's country so perhaps check in with your locals? in my place, I've seen some speculation with folks that banks which were embroidered with stuff like money laundering previously tend to be more strict with the checks. -- but im assuming this could apply in many places as well 🤔

IDK about taxes. depends on how competitive your tax agents are i guess.

When converting my Bitcoin into Fiat, I used to do it on our local crypto wallet which allows us to easily purchase and sell crypto into our local currency.
But now I am doing it on centralized exchange or trading, to be more accurate I am using binance to trade my crypto into cash everytime that I wanted to.
I never really experience any tax other than transaction fees in cryptocurrency.
If you are concern about being monitored or tag on ALMA, then don't send a huge amount in a single transaction try to do it separately with small amounts.

You want to know about a very simple matter and I am telling you this matter in a simple way. You must be aware of P2P transactions, if you don't have a complete understanding of this transaction, you can watch one of these tutorial videos on YouTube. I hope you will have a complete idea about this by watching any video related to P2P transactions on YouTube. You can use Binance or Ku-Coin exchange to make such transactions. These two exchanges will definitely provide you with P2P transactions. First verify the account, then if you want to convert your BTC paper money, go to the funding option and add your bank account or mobile banking number to your exchange. After doing these things well, you can find a good buyer and sell your dollars. In this case, for your information, you will first receive your money and then release your dollars

It seems this will depend on each country's policies and regulations. So maybe what you have to understand first is, what are the crypto regulations in your country? And what about taxes?

I will explain this in my country, maybe this will be different from what is in your country.

1. First, I will explain about the regulation here

In my country, all crypto exchanges must be registered with our country's authorized institute, namely Bappebti. If not, then it is said to be illegal and will cause problems and cannot be accessed freely. And all these exchanges will be directly integrated with various government regulations, including taxes, crypto that must be listed, reports, and so on.

2. About tax in crypto

So, next is related to tax. So, all exchanges registered in Indonesia must simultaneously charge tax for all users for every transaction on the exchange, amounting to 0.11% VAT and 0.10% PPh. So, all automatic transactions will also be subject to tax by directly deducting them from the transaction. So, there is no further problem when carrying out crypto transactions from a regulated exchange because it is already taxed directly on the exchange.

So what happens if you suddenly withdraw a very large and different amount from usual to the bank? Will it be a problem?

Usually, the bank will confirm the transaction, because it is suspected to be an unusual transaction and of course the bank will suspect the existence of this transaction. Because of this, the bank will immediately freeze the account and call the customer to come and confirm where the money came from. Then, after confirming and being able to prove that the money comes from crypto transactions carried out on local exchanges licensed by Bappebti which are automatically taxed, and the bank approves the reason, then it can be taken and won't cause any more problems. So, so far, as long as we follow the rule and regulation here, it won't be any big problem. Just follow the ways and rules.  

Source, read more here:
https://indonesiabusinesspost.com/insider/indonesia-mulls-tax-adjustment-for-crypto-transactions/
https://indonesiacrypto.network/blog/complete-guide-to-crypto-regulations-in-indonesia-all-you-need-to-know-in-2024
https://finance.detik.com/moneter/d-6120578/apakah-bank-curiga-kalau-nasabah-tiba-tiba-dapat-uang-dalam-jumlah-besar

That could happen because the tax system in your country is not strict. However it is still possible that one day later you will be asked to provide a tax report based on the money that goes into your bank account.

That is only a short-term solution to avoid taxes if you are still using your bank account to receive that money.

I have never made a large withdrawal by exchanging 1 BTC to fiat but what I know is that Indodax sets a daily withdrawal if I'm not mistaken 250,000,000 IDR if you want to make a higher withdrawal then you can increase the limit again.

But I also don't know for all countries how the government enforces it, but for our country there will be no question because exchanging BTC to fiat is very common in the sense that many people do it without the need for banks to ask where this is from because the government has supervised and legalized it as a commodity asset.

Bitcoin to fiat transactions are taxable income in many jurisdictions.  Not reporting that stuff can really backfire too, with fines and stuff from the taxman.  If this is really your concern, I suggest you avoid using banks in that case.  They gotta report suspicious activity and deposits to watch for money laundering and and bad things.  So if you want to stay under the radar with crypto, avoiding the banks could be smart.

That’s the work of p2p exchanges and you can do that without having to have a risk thought of not receiving your money after you’ve initiated the sell of your bitcoin in the p2p platform. I have more trust to use those exchanges to trade my bitcoin for fiat than using any of the other methods of conversion that is available. While selling your bitcoin you’re at less risk to lose your money because the person you’re selling to have to send the money to your account and you confirm before releasing the coins for them on the platform.

About bank managers asking for the source of your money, it all depends on how your bank account is on their platform if youve registered as a student, worker or business man and the limit set in your account. They will only be suspicious if you do more than what your account warrants you to do. Like me, I’ll have my ways to get them persuaded where the money came from, although I don’t think anything of such has happened to me or will happen in the future.

Just move your bitcoins to a CEX that is regulated & legal in your country and convert them into fiat from there. CEXs that are affiliated with the government will never have problems with taxation, because every transaction you make is counted in tax, that's what happens in my country.

Also, make your transactions staggered not one time big time transaction. If you can make it on a daily/weekly basis, much better. I have had the same thoughts before and what I did was I converted my btc to fiat at different time intervals, not on a daily basis though. Use exchange platform that is reputable, and if you will use your local exchange, better make sure you submitted legit docs. Don't give them reason to freeze your account for some carelessness.
Try also to check binance p2p, there are so many sellers/buyers who have high limits. But again, don't do it one time. Intermittent transaction is much better to avoid those prying eyes.

The right solution. Instead of having to use strategies a and b, we just have to be busy and spend money over and over again, where the final goal is how BTC can be converted into fiat and entered into our personal accounts without many questions from any party.

I sold my Bitcoin and transferred it to a bank account as needed. That is a normal solution for Bitcoin holders who want to get their fiat. But if the money is big, it looks like you need a third party who can help you transfer it.

If you use an exchange and provide the facility to send money to your bank account, you can use it. As long as the money you send to your bank account is not too large, the bank will not ask about the origin of the money. If they see the money from the exchange, they will probably ask for other documents supporting the transaction.

The bank will be suspicious if a transaction is too large. Therefore, you should send the money by dividing it over several transfers. However, the bank will not be too suspicious if the account has frequently carried out transactions with large amounts of money.

In another thread the OP talks about having more than $20,000 in bitcoin. If it's around that amount, he shouldn't have much of a problem, although it depends on where he is tax resident. Normally, if he can't prove the price at which he bought it, he would be charged 0 cost, and taxed on the total. But if it was more money or considerably more, he would have to be careful because he could be accused of tax evasion. It is best to consult a lawyer.

The limit depends on the level and my withdrawal limit for the exchange is the same as the daily withdrawal limit so that large withdrawal amounts need to be done several times on different days.

Correct. This is understood by all crypto activity actors. As I said before, we cannot avoid taxes and tax officials or bank officials no longer arouse feelings of suspicion when there are people whose transaction history comes from crypto exchanges.

I made a researched on this before and if I'm not mistaken, we can only get taxed in our crypto hodlings if we are profiting. So, simply having or buying the BTC first is exempted to it. There is also a threshold/minimum amount, for us to get charged by a tax and I think it starts at $3k. I'm not only sure if the same rate applies in other countries.

If we can't prove the price where we bought our coins, then we are supposed get charged and it's not a zero sum but it can be higher than our recommended tax pay amount. This is why it's important to track everything and prepare them, just in case we are required by our law to pay a tax. Consulting a lawyer about this matter as you said, is much better as they have more experience and knowledge when it comes to this things.

No bank as a bank is interested in where your money comes from. The question of the origin of the money does not come from the bank but from the government. It is the government that wants to have insight into your finances and (if everything is legal) to charge you as much tax as possible.

Right to the point.

Banks should be viewed as businesses interested only in making a profit from us, and not in controlling financial transactions and the origin of funds. Any bank is also under the yoke of the regulator at the end of the chain “central bank (under the influence of the regulator) -> any bank” and has neither the desire nor the ambition to completely monitor your wallet.

And if it’s illegal, will take everything.

Therefore, need to be prepared for the regulator’s request for the origin of funds through the banking layer.

This depends on the country you come from and what is obtainable there. There are countries where Bitcoin is banned, in that case users have to device means of converting Bitcoin to fiat which they might not be willing to share in public due to crackdown by the authorities. Furthermore, there are countries where Bitcoin is not banned but there is no tax on Bitcoin. In these case, there will be several ways of converting to fiat including using CEX, agents, and even p2p transactions. Finally, for the countries where there is crypto taxes, it is up to the individual to report his earnings to the tax authorities to be able to calculate the taxes and pay accordingly. Even when p2p means of converting BTC to fiat is available, the user can still fill BTC as source of funds to be able calculate the appropriate taxes.

I have never made a large withdrawal so it never occurred to me to make transactions gradually as you said. But now that i think about it your idea is not a bad idea. And one more thing regarding Binance P2P, make sure to choose a seller/buyer who already has a good reputation, my friend was once cheated there even for a small money.


100% 8)

To do this without any task from either government of your bank suspense since some of these banks also have bitcoin regulations, you need to sell your Bitcoin the same way you bought it which is through p2p.

P2P can be physical the same way you buy your BTC, and it can be through the use of centralized exchanges that offers p2p service.
If you don't have someone to trade with physically, you can download a centralized exchange like Bybit to be using them as your market just to buy and sell your coins with them; don't leave your coins in the exchange.

Some people messaged my telegram account and they told me that they buy bitcoins and they are ready to pay any currency against bitcoins. I don't have any bitcoins right now so I can't tell you how to sell bitcoins and convert them to local currency but maybe I can convert my bitcoins to local currency when I have bitcoins through those who messaged me on telegram.

Since the use of P2P trading has been made aware to this question asked by OP, there should be the need for him to know that withdrawal of the funds could be done in bits for regions were it becomes flagged and a suspicious act, also, it could be possible to buy BTC ETF and do the needful from there having waited a while before diversifying or withdrawal of funds to ones bank account.

Using a good wallet during the period of trying to convert Bitcoin to fiat is necessary inorder not to lose funds that wasn't planned and a good hardware wallet for large red funds sounds appropriate enough to ensure that funds don't get lost during and after withdrawal.

We get questions like that from time to time on the forum, but there is no way to give you an accurate answer as your specific circumstances are unknown to us, we do not know if bitcoin is legal to own where you live, how much bitcoin we are talking about, if you want to sell on installments or sell all your coins at once, and without that information we cannot give you a good answer, so you should try to find people where you live which went through a similar experience and see what they did.

I don't think it's a good idea for you to sell your bitcoins at once when you have a huge amount of it and the best thing you can do about it is to diversify it whenever you want to convert them to fiat by using multiple exchanges and cash them out in each one of them. Local exchanges already have rules and regulations and just make sure not to violate them because they will surely hold your account and prevent you from withdrawing your money if they find something illegal with your account. the best thing to convert it is using P2P in some known exchanges which most people do nowadays.

First of all it, depending on the amount you converted when you mean conversion, we don’t know the particular amount it may be something that the bank may not even look into unless the amount is stated, and secondly, most of the exchange that you can convert bitcoin to cash is always Centralized exchange that require you to do some verification and uploading on documents, which is the kyc and with this you may not have because the bank have already align with the order things you needed to do so you don’t have a problem

If these centralized exchanges are all KYC mandatory, it's not big different if you cash out from one centralized exchange or from multiple centralized exchanges. They all know who you are by your KYC documents submitted for verification.

The most common P2P exchanges are like a most favorite targets for banks and governments to put these platforms under their radars.

P2P can be traded through a P2P platforms that increase risk for your privacy.

P2P can be traded in person, it's good for privacy because you will complete your trade in cash, in person but it has another risk. You can be robbed, physical attack or you can receive faked cash.

I think if the funds entering the bank are within normal limits, the bank will not ask where your funds come from, especially if you make frequent transactions.
P2p transactions also mean they have a special account and often use a firm name or CV (in my experience, they don't do  using their real name when sending money to my bank) so why be afraid of questions from the bank?
I think people will not be able to avoid the tax problem. If they are found to have excess assets, a tax letter will definitely come to our house and we will be required to pay taxes

Converting a lot of bitcoin in a lot of transactions may not trigger the security measures of banking sector. Still, it all depends on your bank account and how much balance you maintain usually, and if you receive 100x of the amount will definitely flag your account. You will be reviewed if it's due to glitch or actual funds were transferred in that case if you did from centralized exchange there won't be any problem. Still, if it's from p2p then you might be asked for source of these funds, so don't convert crypto to fiat in all of a sudden unless you have a bank account that can maintain the cash flow as a normal thing.

You are right but I have got some experience when doing a p2p transactions the said amount the buyer was supposed to pay me was a bit different from what I received this experience happened on kucoin, sometimes the exchange charges you indirectly I may not be 100% sure about this but I know that apart from the fact that people don't include the (KOBO) payments in transaction for people in my country Nigeria, sometimes we don't receive the amount that is equivalent to the value of the coins we are selling, does it means the exchange is not aware of this or people see it as tax because personally I habe not made the complain since sometimes the amout difference is usually not up to $1. I think the merchants are taxed by the exchanges that's why they mostly don't pay the exact amount when p2p trade is initiated.

Anything has a risk.

If you sell your coins in centralized exchange, you might have a problem about data breach, wrongly accused and any other centralization problem.

If you sell your coins in decentralized exchange or no KYC P2P, you might have a problem with banks and government because they view Bitcoin as non fungible coins.

If you sell your coins via direct P2P, you have a chance to get $5 wrench attack or get scammed by receiving fake cash.

The best way is to have a friend, buddy who wants Bitcoins and will have a deal with you, i.e. will buy these Bitcoins from you. This way, no one will question where does the money come from unless it's a lot of money.
If you are from the USA, I wouldn't risk it because recently Roger Ver was arrested for not paying taxes and I think that he would put more effort into it than you (nothing personal). If you are from a developing country where laws are strictly protected, it might turn into a big headache if you don't pay taxes.

I do p2p trading whenever I need fiat I send crypto like BTC or USdt and receive fiat in my third-party finance app, like Paypal, Payoneer, Easypaisa, JazzCash, etc. And when I receive funds on these financial applications, I then withdraw funds from these apps to my bank account and I only send funds from this app to banks whenever I have to withdraw them and I am already in the ATM. I send funds from here, and they are reflected in my bank account I am already in the ATM. So I withdraw them. I this phase I don't have to give answers to my bank managers. I mean come on, for a little money like 100$ to 200$ who asks questions?

If you think you need to withdraw more money then use multiple accounts and multiple banks I don't think it's illegal as they allow us to do it so it's legal. Using multiple banks, means you have to withdraw little funds from it, then they won't ask you from where it's coming, I mean they did not ask me. I don't know where are you living, or what's the policy there. But the best way is to pay tax, if its legal and if any imposed if not then try not to do it.

Now that you have mentioned that you own it and you're asking for some help, someone might sneak out on you and try to convince to help you privately.

Be careful with those people because you will never know if they have genuine intentions.

Going back to cashing out your BTC into fiat. I think that has done it in the past knows that if there's a sudden big deposit on your bank account, that will trigger them to have some spot on you and will serve as a red flag without proving where it came from.

With that, whether you trade in cex, dex or p2p, don't withdraw it all at once. Do it in several batches.

You wouldn't want to do that, my friend. Telegram is the most famous place for scammers, and you shouldn't believe anything you see, hear, or receive there, make sure that you are not interacting with unknown people who try to approach you with offers and stuff in your DM because they don't go around and help people or help them make money but they are looking for preys and vulnerable people whom they can scam and run away with their funds.

Whenever you need to convert your assets to fiat, make sure you use a trusted P2P platform where your assets will be escrowed until you receive the funds in your account, and then you can release the assets yourself so that you don't get scammed. Don't try to use online services offered by unknown people.

OP might want to consider bisq. I'm surprised no one has already mentioned bisq in this thread. It's a decentralized P2P trading platform that lets users trade bitcoin for fiat through banks and various other methods. You can receive bank transfers not from known crypto exchanges, so your bank won't know it's bitcoin-related. As long as you do amounts under 10k your bank probably won't ask questions, unless you're living in a totalitarian country.

I have to be honest here that I was really afraid they might treat me like a money launderer, so I did extensive research, looking into banks that don't ban clients for transferring money from and to bitcoin exchanges. For that I've contacted a guy that I knew who was a localbitcoins trader for a few years and asked him which banks gave him problems and which did not and I made an account with the bank he told me about.

When it comes to taxes, there was completely no problems since bitcoin is considered a legal investment in the EU, so as long as the bank accepts the money and you pay tax, the government will not interfere.

That said, I no longer declare my bitcoin and prefer to exchange it for cash p2p.

Basically i use p2p service from different centralized exchange platform like Binance, Kucoin there also Bank transcation is available. you can sell big amount of bitcoin, USDT or some valuable crypto currencys. But after depositing the money in the bank, if the bank authority asks you where the money came from, if Bitcoin is legal in your country, then show the truth. And if illegal then you have to handle these transactions very carefully at your own risk.

I want to comment on the suggested use of P2P exchanges to avoid the attention of the tax authorities. Some people seem to believe that personal (non-business) bank transfers are not scrutinized by the bank, especially if the transfers involve small amounts.

In the general case that is not true. The algorithms used by the banks to detect suspicious transactions and/or accounts are quite complex. They vary one jurisdiction to another and even from one bank to another. And you don't really know what is suspicious to the bank. Multiple small transfers coming from various unrelated people can easily flag your account as suspicious and it could be locked until you provide more information about the sources of these transfers, or you could just be silently reported to the tax authorities.

Also remember that all bank transactions are kept for at least 10 years and potentially forever. So they can easily come after you in 5 years.

The only kind of transfer that leaves very few traces is when the two parties meet face-to-face and exchange crypto for physical cash. And of course it has its own set of problems already mentioned by the other posters, the $5 wrench attack and fake cash being the most serious ones.

why do you have to worry about this, currently there are many ways to exchange bitcoin to fiat and vice versa, one way is to trade person to person but you have to be able to find a trusted person because there are many fraudsters out there, you can look for them on your local board for the start, for now in my opinion the safest way to avoid being detected when making bitcoin to fiat transactions or vice versa is with P2P

Have you decided what to do? or have you withdrawn the funds already because you did not completely explain where are the funds stays now , is it in your personal wallet or exchange wallet?
because from that we can conclude and explain to you what to do specially that you seems to be scared about banks asking
you about the funds from where it comes .