The Full Cost of Realising a Long Position
Execution, conversion, settlement and tax. Where each sits and which ones are avoidable.
Realising a position has four costs. Two are avoidable, one is reducible, and one is not.
Cost one: execution
The considerations below are easier to weigh against a crypto offramp with published settlement times, which states the same variables.
The spread or the price impact, depending on route.
Avoidable in part. Selling on a book at a size it cannot absorb costs several times what a desk quote would. The depth test takes thirty seconds.
Cost two: currency conversion
Where the settlement currency differs from your bank account’s.
Typically half a percent to two percent, and on a large sale it exceeds every other cost.
Entirely avoidable by holding an account in the settlement currency. A one-off account opening.
Cost three: settlement
The transfer fee and, on a cross-border rail, correspondent deductions and a receiving bank fee.
Reducible by using a regional rail, which follows from the currency choice above.
Cost four: tax
The gain against the acquisition cost, at whatever rate applies.
Not avoidable, and it is frequently the largest of the four for a position held through significant appreciation.
The worked comparison
On the equivalent of fifty thousand units, ignoring tax:
| Approach | Total |
|---|---|
| Matched currency, appropriate venue for the size | About 0.3% |
| Mismatched currency, correspondent rail | About 1.6% |
| Market order at a size the book cannot absorb | Add 0.5 to 2% |
The difference between the best and worst execution of the same decision is several times, and none of it concerns the price at which you decided to sell. Funds and family offices carry an extra reporting layer, which a provider handling crypto settlement for property transactions is built around.
The preparation that captures most of the saving
An account in the settlement currency.
A verification tier completed in advance.
A first withdrawal already cleared.
The depth test before choosing a route.
And the bank notified.
None of it takes long and all of it must happen before the decision rather than after.
The tax point worth planning around
The liability arises on disposal regardless of what you do with the proceeds.
For a long-held position it can be substantial and it needs to be set aside from the proceeds rather than discovered later. To see all of this in an operating product rather than in the abstract, the published coverage list publishes the terms.
This is a personal account of holding through market cycles. It describes what one person did and why. It is not a recommendation, and past cycles do not predict future ones.