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Many crypto exchanges impose quite low limits on withdrawing balances from their sites. For example Binance has an equivalent limits of 100 BTC for a daily withdrawal.

The question is, why do they need to impose a limit at all? Are the customers coins not in segregated custody, and when sold in a transaction on the exchange, the funds should be there irrespective of the size of the transaction. In short, why would an exchange need to limit withdrawals at all?

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Limits could be in place for a number of reasons, such as:

  • Regulations imposed by the government of the country the exchange is operating within (eg unverified customers can only withdraw a certain amount)

  • The majority of the exchange's coin reserves are held in an offline, cold storage wallet. So a very large withdrawal may require more coins than the exchange has available in an automated hot wallet (this is a security consideration)

Every exchange will have its own considerations in this regard, but these examples should give you some basic understanding of why limits would exist.

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  • Sounds wrong. Governments don't regulate the exchanges as far as I know. If they can do $200 000 for a level 3 individual then then they can do the same for a level 1. If you do normal trades with banks there is no restriction. That stuff about it being in cold storage is wrong.
    – jack black
    Feb 8, 2018 at 11:31
  • @jackblack please remain friendly and polite, no need for that language here
    – meshcollider
    Feb 11, 2018 at 10:09

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