Bitcoiners get your pitchforks ready: When this bitcoin bull market hits the manic pump phase, some will actually sell a bit of their stack. I know, it’s heretical to say so, but this is reality. If you’re a truly die-hard maxi, skip this post since it’ll be irrelevant for you.

For everyone else: what are you going to do if you sell some bitcoin and end up with, say, 3x your annual salary now sitting in USD on an exchange? Regulated U.S. exchanges have standard FDIC insurance on USD funds (covers up to $250k, same as any U.S. bank account; does not extend to stablecoins). So you maybe have some bank-like protections there. People in other jurisdictions will have to check if their exchanges offer any local fiat protections.

But either way you cannot leave all that fiat there. 

I would be scared to transfer it to a bank account. I worry that my bank would flag my account for having such a huge influx of funds and that I’d be locked out until some years-long audit was completed. Is that likely? Legal? I have no clue. But Bitcoin has taught me to be wary of the banking system.

You could somewhat distribute the risk by converting your fiat proceeds to a stablecoin and then sending some to each exchange and Bitcoin neobank you use. It’s all still custodial but at least no single custodian has the power to totally wipe you out.

I’d feel much better if I could just self-custody my USD stablecoins. Cool, I’ll just get my shitcoin-friendly hardware wallet hooked up to Metamask and pay $50 in gas fees to move my ERC20 USDC stablecoin… wait, how did we end up here?! No! This is not the way!