Guide 8 - Selling and withdrawing back to ILS

Goal

By the end of this guide you will have moved coins from your cold wallet to an exchange, sold them for a fiat currency, and withdrawn the proceeds in shekels (ILS) to an Israeli bank account. You will also know which documents to prepare before the money lands, because an Israeli bank is allowed to ask where it came from.

This is the reverse of guides 6 and 7. Everything that could go wrong on the way in can go wrong on the way out, plus one extra step: the bank.

Nothing here is a suggestion to sell. It is a description of the mechanics for the day you decide to.

Time needed

• Sending from the cold wallet to the exchange: 10-20 minutes, including a test transaction.
• Selling on spot: 5 minutes.
• Withdrawing ILS: 5 minutes to submit; 1-4 business days until the bank credits it, depending on the provider and the bank. At the time of writing, the Israeli exchange Bit2C stated that ILS withdrawals take up to 4 business days. ^[11]
• Bank questions, if they come: anywhere from a phone call to a few days of paperwork.

Before you start

• An exchange account that can pay out ILS, or a two-step route. Most international exchanges do not pay out in shekels. The common routes for an Israeli resident are: (a) sell on a global exchange for USD or EUR and wire to an Israeli bank in foreign currency, or (b) move the coins to an Israeli provider that pays ILS. The Israeli exchange Bit2C listed Bitcoin, Ethereum, USDC and Litecoin for trading at the time of writing, and did not list any of the eight coins covered on this site, so route (b) usually means converting to one of those assets first. ^[11][12]
• A bank account in your own name. Bit2C, for example, only allows one linked Israeli bank account, and it must be in the account holder's name (a joint account with a spouse is accepted). ^[11]
• Your cost basis records. Selling is a taxable event in Israel. If you kept the records described in guide 9, the tax part is a few lines. If not, start there. The overview is on the tax page.
• Patience with the memo or destination tag. For XRP, XLM and HBAR, an exchange deposit requires an extra identifier next to the address. Without it, the exchange cannot tell whose money arrived. ^[1][5]

Steps

Step 1 - Get the exchange deposit address and the memo or tag

Log in to the exchange, open Deposit, pick the coin, and copy the deposit address. For the three coins below, copy the second field too:

The Trezor knowledge base puts it plainly: many users share one deposit address on exchanges, the tag tells the exchange which account to credit, and without it "transactions may be delayed or lost". ^[5] Kraken's XRP page says a deposit sent without the tag can be credited much later than usual and in some cases cannot be recovered at all. ^[1]

Step 2 - Send a small test transaction

In your hardware wallet app, create a send for a small amount. Paste the address, paste the memo or tag in its own field, and confirm every character on the device screen, not just on the computer. Trezor's own guidance for tag-based coins is to send a small test transaction first. ^[5]

Wait until the exchange shows the deposit as credited. On the XRP Ledger, a payment is final once it is included in a validated ledger, and there is no undo. ^[7] That is exactly why the test matters.

Step 3 - Send the rest

Repeat with the full amount, re-copying address and memo or tag from the exchange rather than reusing a saved draft. Keep enough coins in the wallet to respect the chain's rules; XRP and XLM accounts have a minimum reserve that cannot be withdrawn, and some wallets will refuse a send that would breach it (see the coin pages for the current figures).

Save the transaction id (TxID) from your wallet. You will want it for your records and for support if anything goes wrong. Kraken's recovery article, for example, asks you to give support the TxID, the asset and amount, the deposit address, and the date and time. ^[6]

Step 4 - Sell on spot

Open the spot market for your coin against USD, EUR or ILS, depending on where you are. A market order fills immediately at whatever price is available; a limit order waits for your price. On a thin order book a market order can suffer slippage, so for anything but tiny amounts a limit order close to the current price is the calmer choice.

Download or screenshot the executed order: date and time, quantity, price, fee. This is the sale record for your tax file.

Step 5 - Withdraw to your Israeli bank

Route A - Israeli provider paying ILS. At Bit2C, at the time of writing, a withdrawal goes to the single linked Israeli bank account in your name, the minimum is 180 ILS, the maximum is 700,000 ILS per 30 days, the fee is a flat 80 ILS including VAT, and processing takes up to 4 business days. ^[11][12] The same FAQ notes that some banks may refuse crypto-related funds and recommends checking your bank's policy in advance. ^[11]

Bits of Gold is another Israeli provider that converts coins to shekels. Its help center lists XRP and Cardano among the coins in our set, and its payment-methods page shows a minimum of 200 ILS to sell into the fiat wallet, and a fiat withdrawal to a bank account with no fee from 750 ILS (15 ILS below that). ^[14] Check current fees, supported coins and the licence number on its site directly.

Route B - Foreign currency wire from a global exchange. Withdraw USD or EUR by bank wire to your Israeli account's foreign-currency sub-account (or let the bank convert). Expect a correspondent-bank fee and the bank's conversion spread, and expect the questions in Step 6.

Step 6 - Answer the bank's questions with documents ready

In 2022 the Supervisor of Banks at the Bank of Israel added section 87A to Proper Conduct of Banking Business Directive 411, which deals with anti-money-laundering risk management. It set out how banks should handle payments connected to customers' activity in virtual currencies and classified such payments as high-risk, while requiring banks to adopt a policy for serving them rather than refusing without grounds. ^[9] Law-firm summaries of the directive describe what banks have typically asked for: references on the source and path of the funds, trading records from the exchange, the identity of the parties, and income tax reports; some banks also require an external opinion from a specialised law or accounting firm. ^[10]

On 2026-10-07 the Supervisor of Banks published a final amendment to the same directive, effective 2027-05-01. Its regulatory report states that a bank may not refuse payment services across the board just because the funds are connected to virtual currencies, and must examine each transaction individually according to the customer, the complexity, the coin and the service provider. The amendment also removed the earlier rule that required a source-of-funds and coin-path check whenever activity exceeded 100,000 ILS a year, replacing it with checks scaled to the risk profile. ^[8]

What this means in practice: the bank can still ask. Have these ready before the wire arrives:

1. The exchange's KYC confirmation and account statement showing the deposit of coins and the sale.
2. Proof of the original purchase (guide 6) - the ILS or foreign-currency transfer that funded it, and the buy order.
3. The on-chain path: TxIDs for the transfer to your cold wallet and back, and the wallet addresses, so a reviewer can follow the coins on a block explorer.
4. Tax paperwork: your annual return or a letter from your CPA if the amounts are meaningful. Israel's tax authority treats a sale of virtual currency as a disposal of an asset subject to capital gains tax, and expects documents that substantiate the income to the assessing officer's satisfaction. ^[13] Details on the tax page.

Common mistakes

• Forgetting the memo or tag. The single most common exchange-deposit error for XRP, XLM and HBAR. Kraken lists "missing or wrong tag/memo" among the deposit mistakes its recovery team handles, and charges the network fee to fix it. ^[6]
• Pasting the tag into the address field or the address into the memo field. Check which field is which on the device screen.
• Sending on the wrong network. If the exchange expects native XLM and you send a wrapped version on another chain, you have created a hard recovery case. See guide 10.
• Skipping the test transaction to save a fee. The fee is small; an irreversible mistake is not. ^[7]
• Draining the account below the reserve. The send fails or the account becomes unusable.
• Not checking the bank first. Bit2C itself tells users that some banks may refuse crypto-related funds. ^[11] A ten-minute call to your branch before you start is cheaper than a frozen transfer after.
• Treating the sale as tax-free because it was "just converting". A sale for fiat is a taxable event in Israel. ^[13]

If something goes wrong

The deposit does not show up. Find the TxID in your wallet and open it on the coin's block explorer. If the chain shows it delivered to the exchange's address, the problem is on the exchange side, often a missing or wrong memo or tag. Open a support ticket and provide what Kraken's form lists: TxID, asset and amount, deposit address, date and time. ^[6] Do not send a second payment "to fix it".

You forgot the tag or memo. Same ticket. Kraken says recovery of a missing-tag deposit costs the network fee and the funds are credited or refunded, but its XRP page also warns that in certain cases recovery may be impossible, so expect delays. ^[1][6] More in guide 10.

The bank asks for documents you do not have. Ask the exchange for a full account statement (most offer a PDF or CSV export - see guide 9), and reconstruct the on-chain path from explorers. If the bank still refuses, you may ask for the refusal in writing; under the 2022 text a bank may not refuse only because funds come from an Israeli-licensed crypto provider, and from 1 May 2027 the amended directive requires banks to examine such transactions individually rather than refuse across the board. ^[8][9] A lawyer or CPA who works with crypto clients can help you present the file.

The withdrawal is "pending" for longer than stated. Check the provider's published response times first (Bit2C publishes them in its FAQ). ^[11] Then open a ticket with the withdrawal id.

Official help articles

• Kraken - Destination Tag for XRP deposits ^[1]
• Kraken - Crypto assets deposit recovery ^[6]
• Trezor - Destination Tags (Memos) explained for XRP, XLM, and more ^[5]
• XRP Ledger docs - Source and Destination Tags ^[2]
• Stellar docs - Operations and Transactions (memo field) ^[3]
• Hedera docs - Transactions and Queries (memo field) ^[4]
• Bit2C - FAQ and fee schedule ^[11][12]
• Bank of Israel - regulatory report on the Directive 411 amendment ^[8]

Sources