mt gox bitstamp arbitrage

[vps15]

is it actually possible to do a mt gox bitstamp arbitrage? I'm talking selling btc on gox then transferring that fiat to bitstamp or some other exchange where the exchange rate is lower and then sending those coins back to gox?  has anyone tried to do this?

the real issue here is minimizing the time it takes to transfer the fiat.

[byronbb]

Apparently not as easy as one would want...the spread has narrowed suggesting however some have figured it out. I think it might involve actually having a JPY bank account.

[Zangelbert Bingledack]

...or coordinating with someone who does.

[patryn]

The issue is that MTGox is not processing withdrawals for the most part. If you believe that your withdrawal will eventually pay out, then it's more of an issue of having funds stuck for an undetermined amount of time, as opposed to being cycled into additional arbitrage betting. Apparently, some are receiving withdrawals in JPY. Generally, bank exchange rates back and forth, in addition to wire fees, will eat away at profits from these bets.

[Zangelbert Bingledack]

I live in Japan, and JPY withdrawals from MtGox are proceeding without significant delay as far as I've seen.

[crazy_rabbit]

The issue is that MTGox is not processing withdrawals for the most part. If you believe that your withdrawal will eventually pay out, then it's more of an issue of having funds stuck for an undetermined amount of time, as opposed to being cycled into additional arbitrage betting. Apparently, some are receiving withdrawals in JPY. Generally, bank exchange rates back and forth, in addition to wire fees, will eat away at profits from these bets.

Are you withdrawing single digits or something?

[Jhantor]

Some seemingly reputable people have alleged in the Service Discussion forum that Mtgox processes supposed Emergency transfers that take a 5% cut. I have seen no evidence for this.

[phelix]

I have heard rumors that SEPA transactions have been limited to one in 10 days. At least a second transaction I did (1000€) I am still waiting for after almost two weeks while the first one took a week or so.

[vps15]

i suppose if the arbitrage was possible/ easier or more well known then there would be no possible arbitrage.  in the future when fiat can be returned from mt gox faster there will be no difference in exchange rate between gox and bitstamp

[mgio]

I used to do this. It was only really worthwhile when the spread was 5% or more. There were a lot of issues:

- International wire transfers take time and with Bitstamp -> Mt.Gox arbitrage you have international transfers on both ends. It can take up to 2 weeks to do a round. Thus, you need a large bankroll. The more money you have the more you can arbitrage. But too much money and you risk moving the market. If you have enough you can send a little more up everyday and have the money pipelined so you are sending transfers, receiving transfers and arbitraging everyday. I did $5k a day at it was barely worth my time. International bank transfers can also take up to 30 min to perform at your bank since they require a lot of paperwork and then a phone call and they typicall can't be done by an ordinary teller. Some banks let you automate this a little bit and let you do it over the phone but it requires even more paperwork up front.

- You get hit with fees everywhere. Exchange fees on Bitstamp and Mt.Gox and wire transfer fees from you bank. And possible currency exchange fees too. They also can be expensive depending on your bank. At one bank I use it was about $40 or $50 but at my other bank it was only $18 but only if I sent the money in Euros (even with the exchange it was cheaper).

- To properly arbitrage you need to buy and sell at the same time. Since it can take an hour or more for the coins you buy on Bitstamp to arrive at Mt.Gox, you need to have an extra stash of coins already up on Mt.Gox ready to sell. This means you actually need twice the bankroll for risk-free aribtrage.

Finally, you can't do this anymore!

Mt.Gox is not processing bank withdrawals in USD anymore. I mean, maybe they are, but it is so slow as to make arbitrage impossible. I had $20k stuck up there for nearly 6 weeks until I gave up and canceled my withdrawals and rebought BTC (thus negating any money I could have made from arbitrage).

[Zangelbert Bingledack]

Last time I went to Citibank in Japan they had an option for dollar accounts where yen deposited to the account would be automatically converted to dollars. If they do this for euros, then you could just use your Citibank ATM card to withdraw euros in Europe. Fast and cheap!

[vps15]

why does it take mtgox so long to process withdrawals?

[Ray Anastasio]

why does it take mtgox so long to process withdrawals?

I'll speculate:  maybe they are trying to earn profit directly from some investment or interest as well as frim commission.  For example, a whale buys 1 million worth of bitcoin. But the don't give that million to the seller right away, they hold it for a few months.

[notme]

why does it take mtgox so long to process withdrawals?

I'll speculate:  maybe they are trying to earn profit directly from some investment or interest as well as frim commission.  For example, a whale buys 1 million worth of bitcoin. But the don't give that million to the seller right away, they hold it for a few months.

The money they could potentially earn from fees is much more than the interest they could earn holding it for a few months.  Not to mention, they would be illegally exposing their customer's funds to risk of loss.  It is much easier for me to believe that they simply are having trouble finding banking partners that aren't throwing every possible reporting form they can find at MtGox for every transaction.  Nobody knows exactly what regulations apply to bitcoin, and banks are risk averse when it comes to regulations. especially for something they view as small potatoes (compared to their other businesses).  Because of this uncertainty, they make MtGox report everything, and they set very strict limits on how much volume they can process and how fast they can grow their volume.

[WattBurner]

I'm very interested in attempting arbitrage via Coinbase to MtGox.

I'm well aware of MtGox's international bank wire withdrawal backlog. How long are the domestic Japanese banks deposits from Gox taking? I've read a few forum users claim it only takes a few of days, is this true?  I have a trusted Japanese friend currently living in the U.S who has a Japanese bank account.

What if......

I buy 50 BTC on Coinbase everyday...

My friend starts a Gox account and Sells my bitcoins on Mtgox...

deposits funds to Japanese domestic bank account...

Japanese friend wires funds to my US bank account, or potentially, my friend's Japanese bank may have a branch in US linking to Japanese domestic account allowing us to withdrawal cash in US.

With the current $10 price spread, we'll make $500 per transaction minus coinbase/Gox/bank fees. Will this work??? Can my friend open a MtGox account using an US ip address or does it need to be a Japanese IP address? What tax liability is there for this kind of activity? How long would the round trip of funds take?

Anyone have anecdotal experience executing a similar process, please share and thanks in advance.

[notme]

I'm very interested in attempting arbitrage via Coinbase to MtGox.

I'm well aware of MtGox's international bank wire withdrawal backlog. How long are the domestic Japanese banks deposits from Gox taking? I've read a few forum users claim it only takes a few of days, is this true?  I have a trusted Japanese friend currently living in the U.S who has a Japanese bank account.

What if......

I buy 50 BTC on Coinbase everyday...

My friend starts a Gox account and Sells my bitcoins on Mtgox...

deposits funds to Japanese domestic bank account...

Japanese friend wires funds to my US bank account, or potentially, my friend's Japanese bank may have a branch in US linking to Japanese domestic account allowing us to withdrawal cash in US.

With the current $10 price spread, we'll make $500 per transaction minus coinbase/Gox/bank fees. Will this work??? Can my friend open a MtGox account using an US ip address or does it need to be a Japanese IP address? What tax liability is there for this kind of activity? How long would the round trip of funds take?

Anyone have anecdotal experience executing a similar process, please share and thanks in advance.

Neglecting regulatory concerns (you and your friend would be acting as money service businesses and money transmitters, which requires registration with both the feds (FinCEN) and your state government), you'll likely have more fees than you expect.  Yen withdrawals to Japanese banks are fast, but USD withdrawals are still backlogged, so you will be receiving Yen.  You will either need to convert it at the Japanese bank if they allow USD accounts, or just wire it and accept the automatic conversion.  Not only will you get a shit exchange rate, they will tack on a 3%ish currency exchange fee in addition to your standard wire transfer fees.  Wiring from Japan to US will likely run you between $50-75, which isn't too horrible if your volume is high enough.  Tax liability would likely be capital gains on any profits, but I'm not an accountant, so please seek professional advice there.

[WattBurner]

The regulatory requirements if required do put quite a damper on this plan. But wouldn't coinbase, Mtgox and the banks technically be performing the exchange portion of this transaction? We would simply be using their services. What's the difference between this process and me simply buying coins on coinbase, selling them directly on Mtgox and wire to my US bank , besides taking months for an withdrawal to process? If we keep records of all cash flow and prove to the IRS were paying appropriate tax, I don' understand the issue.

[notme]

The regulatory requirements if required do put quite a damper on this plan. But wouldn't coinbase, Mtgox and the banks technically be performing the exchange portion of this transaction? We would simply be using their services. What's the difference between this process and me simply buying coins on coinbase, selling them directly on Mtgox and wire to my US bank , besides taking months for an withdrawal to process? If we keep records of all cash flow and prove to the IRS were paying appropriate tax, I don' understand the issue.

http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Definitions of User, Exchanger, and Administrator

This guidance refers to the participants in generic virtual currency arrangements, using the terms "user," "exchanger," and "administrator."6 A user is a person that obtains virtual currency to purchase goods or services.7 An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency

By my reading, your proposed actions would qualify you as an exchanger as "a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".  Basically, this covers any buying and selling for profit which is why this guidance has had such a chilling effect on US traders.  Technically, here in the "land of the free" we are only allowed to use virtual currency as a payment method.  Yet, somehow, money is speech, so we can't restrict campaign donations by corporations.

Again, I am not a lawyer, so please seek expert advice from a lawyer and or accountant.

[WattBurner]

Wait a minute... So by that same logic. If I buy coins on coinbase today, then sell them back to coinbase a month later at a profit(assuming btc price rises) I would be classified as an exchanger?

Isn't this the goal of most people buying bitcoins? Is there currently no legal way for a "user" to speculate on the price of BTC without Fincen and state government approval?

What if my s-corp pays me for my services in BTC via coinbase? I'm I only allowed to buy products and services with this btc and not eligible as a "user" to convert it back to USD?

[WattBurner]

How about this hypothetical...

I buy for 50 btc a "good" from Japan and have that "good" shipped to me. Customs declared value 50btc

I then sell and ship a different "good" to Japan for $6500 paid via international wire transfer. Customs declared value of $6500

Maybe that "good" could be a software program that doesn't need to be physically shipped?