BTC limit for "large withdrawals" on Bitstamp

[mmeijeri]

Does that mean it is insured by the FDIC?

[bernard75]

FDIC is US only afaik.
Anyway you saw what happened in Cyprus.

[Terk]

As i understand it Bitstamp processes large withdrawals manually.
It took 7h yesterday for the transfer to just being initiated.

Does anybody know what they consider "large"?

I think they might experienced a significant drain of BTC in recent days which they were not prepared for. Price difference between MtGox and Bitstamp has been at 5-8% for the last week. Lot of people were doing arbitrage moving funds MtGox->Bitinstant->BitStamp or MtGox->AurumXchange->Bitstamp to take advantage of this. So people were depositing BTC into MtGox, trading to USD, then moving USD to Bitstamp (via Bitinstant or AurumXchange), trading to BTC, then moving BTC to MtGox. So Bitstamp suddenly started getting much more USD deposits and much more BTC withdrawals than usual.

[Lohoris]

They do convert all fiat money that is deposited into their accounts into dollars, but I don't know where those dollars are held. I don't understand why they do this though, because they do issue EUR and JPY IOUs and that seems to entail unnecessary exchange rate risk.

Since they do convert everything to USD, they are not at exchange rate risk.

If I deposit 100€ when EURUSD is 1.3, I get 130$ in the Bitstamp account, and they likely internally held it in USD.
Then if EURUSD drops to 1.2 and I withdraw, I get 108€, thanks to the new exchange rate. But they didn't lose anything, if they really converted the currencies, rather than only "displaying" it.

[mmeijeri]

If I deposit 100€ when EURUSD is 1.3, I get 130$ in the Bitstamp account, and they likely internally held it in USD.
Then if EURUSD drops to 1.2 and I withdraw, I get 108€, thanks to the new exchange rate. But they didn't lose anything, if they really converted the currencies, rather than only "displaying" it.

Sure, but what if I buy a EUR IOU from them? If it's backed by USD, there is currency risk when I redeem it.

[TimJBenham]

Sure, but what if I buy a EUR IOU from them? If it's backed by USD, there is currency risk when I redeem it.

They could do a corresponding conversion of USD back to EUR, or refrain from converting some incoming EUR to USD, or just accept the risk. If their exchange rates are current then their expected loss is zero.

[Lohoris]

Sure, but what if I buy a EUR IOU from them? If it's backed by USD, there is currency risk when I redeem it.

It's fake EUR, actually, since once you send it to them, they "convert" it again to USD.
They of course you can withdraw (via SEPA) to a real EUR account, converting again.