To start, let me explain what a (DCE) or Digital Currency Exchange is. It is also sometimes called a Cryptocurrency Exchange. This is an online exchange which lets the customer typically buy, sell or trade digital assets, cryptocurrencies or digital currencies for one another or for the exchange of real world currencies (FIAT) such as the US or Australian dollar.
Some digital exchanges work just like a FOREX type exchange where there is an order book, bids and ask spreads and the exchange takes a commission fee as any normal stock market trading exchange would.
A Bitcoin Exchange is no exception to the above. They are plentiful worldwide and they are used for millions and in some cases billions of dollars’ worth of transactions on a daily basis. Some just exchange between the customer and the business, some allow you to only buy Bitcoin and others allow for a complete bid-ask market to exist with deposit and withdrawal features build in.
Generally the exchanges that allow the deposit of a FIAT currency for example AUD onto their platform have to comply with certain government rules and regulations. Some examples of this are the following:
- AML – Anti Money Laundering
- CTF – Counter Terrorism Financing
- AUSTRAC – Australian Transaction Reports and Analysis Centre
Then on top of that each user wanting to deposit, for example AUD needs to meet the above requirements which include providing proof of some of the following.
- Australian State or Territory Drivers Licence
- Australian Passport
- Proof of Australian Residency or Citizenship
- The Current Date (by taking a picture of a newspaper with today’s date for example.)
- A Picture of Oneself holding up his or her Drivers Licence next to their face
- A copy of an Australian Bank statement or card with a matching name to the other documents.
- Hand written statement with the date held in a selfie with Drivers Licence.
With many more depending on the exchange.