Caveat, before I get attacked from a philosophical point of view: I am not trying to say that fiat is better than crypto, or that crypto does not have a value in itself. OF COURSE, in an ideal situation, none of us would ever move our money back to fiat again.
However, before the world changes, some people may have a crypto:fiat:income ratio such that it makes sense for them to convert some value back into fiat.
On crypto boards and subreddits of various stripes, users regularly talk about "cashing out" into dollars (or other fiat currencies), as if that's a thing that can actually be done. But very rarely are stories posted of this actually happening successfully. When I do see such stories, they are almost always about very small amounts of money, e.g. less than $100 US.
Having extensively googled such phrases as "how to convert bitcoin (for example) to fiat," I find one consistently repeated piece of generic advice for converting crypto into fiat: use an exchange.
However, as many of us are surely well aware by now, this does not actually solve the problem. Exchanges like Coinbase and Gemini do not give dollars directly to users. Within Coinbase, you can convert your ethereum to dollars, but that doesn't mean you have access to the dollars. First, you have to transfer those dollars to your bank account. And a great deal of evidence suggests that many banks are not cooperating when they see money coming in from a crypto exchange.
Sometimes the user's account is frozen. Sometimes his or her account is closed by the bank. There don't seem to be any banks (operating in the US, at least), that have a record of never doing this to anyone.
I've seen a lot of vague, anecdotal advice on this score, such as "try a credit union" or "don't transfer out enough money to alarm the bank." But in practice, that advice is not very useful. I've found plenty of stories about credit unions that don't cooperate with deposits from crypto exchanges, and few people are interested in, or could, game the algorithm at their local bank for what constitutes a suspicious deposit. Some traders who are already wealthy in the fiat world and make a lot of transfers in and out of their accounts may not have a problem. If you're one of those people, good for you. Others may need to figure out something else.
Yes, banks are threatened by crypto. Yes, they are also worried about unregulated marketplaces and money laundering, etc. I get it. But knowing that doesn't answer the question: If I need actual dollars, to what traditional banking entity should I connect my crypto exchange account?
From the research I've done, the choices are as follows:
a) Try to deposit back into the same account you got your initial investment out of to begin with, and hope the bank cooperates. If it doesn't, become one of the people who goes around posting about how your account is frozen and you hate your bank.
b) Get some kind of debit card that pulls directly from cryptocurrency, thus essentially converting to fiat at point of purchase or ATM withdrawal. Just keep doing that. If you need a lot of fiat money then you will just have to end up making ridiculously large ATM withdrawals.
c) Just keep it all in crypto (or in fiat, on an exchange where you can't get to it) and wait out the storm, hoping that eventually, you will either be able to use crypto for everything you need, or some reliable method of conversion back into fiat will manifest. Meanwhile, keep working at a fiat job to pay rent, regardless of how much you may be worth in crypto-world.
I am eager to hear about some d) alternative that I have not yet considered or located.
I'm seeing a lot of people in various specific coin communities openly fantasizing about all the things that they think they are going to buy once their coin of choice "moons." Setting aside the fact that their confidence may be misplaced, what's more interesting to me is trying to imagine the actual cash out.
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