Take control of your crypto by withdrawing it to self-custody. Learn how to move your funds from a centralized exchange to the wallet of your choice and have full control no matter what happens.
Withdrawing your crypto from a centralized exchange (CEX) like Binance, Kucoin, Kraken or Crypto.com should be a fairly simple process, but some exchanges make it more difficult and expensive than it should be.
While it is your right as a web3 user to take ownership of your assets, custodial exchanges have been shown to make money from user deposits, and therefore might make you jump through extra hoops like multiple security checks and charge a large premium much higher than the actual onchain fee to withdraw.
Why withdraw from a centralized exchange to self custody
Centralized exchanges may be convenient but they are based on the legacy financial system that crypto was designed to replace. Having crypto in a CEX is like having crypto with your bank. It's not really crypto, it's just fintech. Cryptocurrencies are assets that any individual can control without the need for a third party, while CEXs are a third party that requires you to give them control of your assets. To become a web3 native, you need to take control, by yourself.
Take custody of your crypto
Depositing your assets with a third party custodial exchange means that they choose what happens to your money. You trust them to secure your crypto, and you trust them to let you use your crypto when you need it. When that trust is broken and the exchange uses your money for their own gain, as happened with FTX just last year, there is little you can do to recover your funds.
If you really want to be part of web3, you need to learn how to secure assets on your own, in self-custody. That means owning the cryptographic keys that let you move assets across blockchain networks. It may sound complicated, but in reality you only need two things - a wallet, which you can get for free, and the keys that wallet generates, which are represented by a recovery phrase - a list of 12 or 24 english words.
Enjoy permissionless finance
Custodial exchanges are just like banks. They set the rules about how you use your assets, and can at any point decide that they don’t want to give you access to your money anymore. If they want, they can even reinvest your funds and keep any profit they make, or shut down operations and run off with your funds entirely.
Self-custody is permissionless. You are always the only person who has access to your assets, and you can send them to anyone you like, invest them as you wish, and trade without barriers or borders. No matter what happens, your money is protected by cryptography that no entity could decrypt even with all the computing power in the world running for thousands of years. Although you may have heard about crypto being hacked before, these incidents are not due to cracking the keys but usually scams, social engineering or exploits of exchanges themselves.
Benefit from cheaper trades
Traders who are new to crypto might be surprised by the amount of fees they encounter in crypto apps. Those fees generally have little to do with crypto networks, rather they are a result of using centralized exchanges that charge high premiums for trading.
Swap tokens on Matcha for free!
Trading fees on a CEX platform range from around 0.1% to as much as 1.5% on any trade you make. And that’s before considering the huge fees they charge to withdraw your assets if you ever want to take custody of your funds, and minimum withdrawal thresholds. On Matcha DEX (a decentralized exchange aggregator), trading one token for another in a swap costs absolutely zero platform fees, and the assets always stay in your custody.
Ready to take control of your money once and for all? Keep on reading and we’ll show you how to withdraw your crypto from a CEX and move it into the safety of self-custody!
Setting up a wallet to withdraw to
Before attempting to withdraw your crypto, make sure you have somewhere to send it! There are many options out there, and the majority are free. You have a choice between hot wallets (software applications) and cold wallets (hardware devices).
Cold wallets are considered more secure for long-term storage, but you will have to pay for them. For the purposes of this tutorial, we will be using hot wallets. If you already have a hardware wallet, the principles are the same.
Step 1: Download and set up your wallet.
Download a software wallet from the official website and launch the app. Most wallets are available as mobile apps and browser extensions for Chrome-based browsers. Here, we have installed Zerion on an Android phone.
The setup process is simple. You will need a pen or pencil and a sheet of blank paper. First write the numbers 1 to 12 down the left-hand margin of the page. Then use your new wallet app to begin the new wallet creation process.
During setup, you will be asked to save a list of words known as a recovery phrase. Write these words on your paper in the order they are shown, next to the numbers you wrote in the margin.
These words will let you recover your wallet if you lose access to the app or your computer is damaged. Put the paper in a safe place - if someone else gains access to it, they will be able to load your wallet and steal your funds.
Never save your recovery phrase digitally as a text document, screenshot or photo, or your funds can be stolen over the internet.
Step 2: Get a new receiving address
Each Ethereum account is identified by a unique address which lets you receive funds from other people or from another account you have access to. On a CEX, both you and the exchange have access to your account, meaning you can move your money around, but so can they! By creating a new account in your wallet app, only you should be able to move funds that are stored there.
Once your account is set up, the app will automatically generate an account for you. This account is generated from the list of words you wrote down earlier. You can create new accounts from the same list, but for now let’s stick with the one you’re given.
To get a receiving address to send your funds to, just look for the string of random numbers and letters beginning with 0x on the wallet page of your app, then click on Copy to copy the full address to your clipboard. You will need to paste this address into the Withdrawal address field on your CEX to send your funds into your custody.
Withdrawing crypto from your exchange account
Now, you will need to go to your exchange and open the Withdraw page. Here’s where to find the withdrawal section for some of the most popular exchanges:
As shown in these guides, you will need to navigate to your CEX portfolio page where you should find a page or button named Withdraw or similar. Once there, you choose the asset to withdraw and double-check it is on the correct network to be compatible with your wallet (in our case, Ethereum), then say how much to withdraw.
Since withdrawal fees from these exchanges can be over 1% of the total amount, or even a flat rate of several dollars or more, it is best to withdraw all your assets at once, unless you want to leave some on the exchange for future use.
When you’ve set the asset and amount to withdraw, simply click the Confirm button. Most exchanges will make you perform a security check at this point, such as entering a 2FA (two-factor authenticator) code associated with your account. Once that’s done, your assets should be on their way.
Why is my withdrawal taking so long?
While blockchain transactions should only take a few minutes, centralized exchanges will often batch transactions together to save themselves money on network fees, and may even enforce a 24-hour freeze on your assets for security reasons before processing the withdrawal. In these cases, you may be forced to simply wait it out. If the withdrawal takes longer than the stated period, contact your CEX’s support team.
Securing your funds in self-custody
When your funds finally arrive in your wallet, you should see a new transaction showing the amount received from your CEX. Those funds are now exclusively under your control - feels good, right?
Taking responsibility for your own funds might seem like a lot of work, but as long as you look after the recovery phrase, you will be able to recover your money if anything goes wrong. And, if your favorite CEX experiences a security incident or collapses like FTX did last year, you will have all your funds under your control rather than tied up in legal proceedings or gone forever.
Welcome to DeFi!
Now that you finally own your money outright - the way crypto was always meant to be used - you can engage with the full breadth of what DeFi has to offer. Swapping tokens without permission, staking assets for passive income, providing liquidity for token rewards, being part of DAO governance, placing decentralized limit orders, moving your crypto across networks and much more!
You’ve just taken the first steps in decentralized finance - well done! There’s lots more to learn, but the most important part is now behind you. Take some time to read through Matcha blog and learn more about what makes DeFi so special and figure out what opportunities you can take advantage of, now that you’re the only one who chooses what to do with your money!
