First, let’s clarify the difference between a crypto wallet and an exchange.
A crypto wallet is software that stores your public and private keys and interacts with the Blockchain to allow you to send and receive digital currencies and monitor your balance. An exchange, on the other hand, is a platform that allows you to buy, sell and trade cryptocurrencies.
You can also keep the coins in the exchange but it is not recommended because the ownership of the coins remains with the exchange and not you. That’s why it’s always a good idea to keep the coins in your personal wallet unless you often trade with the money.
To transfer money from your bank account to a cryptocurrency wallet or exchange, you will need to have an account with a cryptocurrency exchange that allows you to buy the digital currency you wish to purchase. Two very popular exchanges to use are Binance and Kraken.
After you have created an account on the stock exchange, you will be able to purchase simply and quickly using a credit card, but usually the fees are very, very expensive and not profitable this way, so it is recommended to use it only in small amounts of a few hundred to a few thousand.
Another and cheaper option is through a bank transfer. You will need to link your bank account to the stock exchange account. This can usually be done by providing your bank account details. You may also be required to provide additional information, such as a copy of your ID or a utility bill in your name, to verify your identity.
Once your bank account is linked, you can start the process of transferring the money from your bank account to the exchange. This is usually done via wire transfer or ACH transfer. A wire transfer is a direct transfer of funds from bank to bank, while an ACH transfer is an electronic transfer of funds between financial institutions.
It is important to note that each exchange has its own rules and fees for transferring money. Some exchanges may charge a flat fee for transferring money, while others may charge a percentage of the total amount transferred. Be sure to check the fees associated with transferring money to the exchange before starting the process.
It should be noted that in Israel it is still not easy to transfer large amounts of money from the bank account to crypto exchanges without your bank intervening and trying to find out the reason for the transfer. Usually you request an “exemption from withholding tax” form from the income tax which you have to fill out through the income tax office or through your bank and then the money is transferred. Each bank has slightly different regulations and rules. Talk to your bank about this before you transfer to avoid misunderstandings later.
Once the money has been transferred to the exchange, you can use it to buy the cryptocurrency you want. The process of purchasing cryptocurrency will vary depending on the exchange you use, but most exchanges have a simple process for purchasing digital currency. Simply select the cryptocurrency you want to buy, enter the amount you want to purchase, and confirm the transaction.
Another way, which is the simplest but slightly more expensive than the others, is to invest through Altschuler Shaham Horizon, which are the only ones in Israel today that allow “withholding tax” and work together with the banks, which means – you will not have any problem or delay in transferring the funds from the bank to your wallet and back to the bank. No need for an accountant and no need for independent reporting. When you want to return the money to the bank account, the money will be returned after fees, and clearing capital gains tax, if any.
This way is most suitable for less technological people or people who want to save themselves the trouble of reporting independently and dealing with the banks.
If you did everything independently through a regulated exchange like Kraken
In order to return the money to the bank after the profits, if any, you will have to prove the route of the funds. That is to report independently or through an accountant on the movements and transactions you made with your money during the year.
Today there is also a very successful Israeli startup company that greatly facilitates the independent reporting process called Bloxtax, you can use them to submit the required reports.
If you invested through Altschuler Shaham Horizon, they perform a “withholding tax” for you and all reports are made through them without you having to do anything except return the money to the bank account with the click of a button.
In summary, transferring money from your bank account to a crypto wallet or exchange involves creating an exchange account, linking your bank account to the exchange, transferring the funds to the exchange, and then using the funds to buy the desired currency or coins. Just be sure to research the exchange you’re using and know their fees and policies before you start the process.
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