Digital currency exchanger

Digital currency exchanger

Digital currency exchangers (DCEs, independent exchange providers or e-currency exchangers) are market makers which exchange fiat currency for electronic money, such as digital gold currency (DGC), and/or convert one type of digital currency (DC) into another, such as Liberty Reserve into pecunix. Exchangers apply either a commission or bid/offer spread to transactions.

Some digital gold currency accounts, such as e-gold, do not provide an in-house service to purchase their private currency so it is necessary to use a third-party digital currency exchanger. According to e-gold's website the reason they do not provide an in-house exchange service is so there can be no debt or contingent liabilities associated with the business, making e-gold Ltd. absolutely free of any financial risk. They claim e-gold Ltd. does not possess currency of any nation or even have a bank account.

Contents

Risks

There are no specific financial regulations governing DCEs, so they operate under self-regulation. However the Global Digital Currency Association (GDCA), founded in 2002, are a non-profit association of online currency operators, exchangers, merchants and users. On their website they claim their goal is to "further the interests of the industry as a whole and help with fighting fraud and other illegal activities, arbitrate disputes and act as escrow agent when and where required." [1] GDCA is a privately owned organization and not an association of its members per se. Its views and opinions are highly subjective. It is completely irrelevant whether or not any of the exchange companies are members of GDCA.[citation needed]

It is possible for clients to purchase DGC by credit card, and therefore receive consumer protection from their credit card company. Various exchangers offer this service, although the exchange fees are typically higher than using a wire transfer. [2]

Exchangers

Comparison of Digital Currency Exchangers (DCEs) as of 18 April 2010:

Digital Currency Exchanger Year
founded
GDCA
member
Telephone Telefax email Digital
currencies
(DC) accepted
Fiat currencies accepted Fee buying DC Fee selling DC Fee exchanging DC to DC
wmXchange.net 2009 Red XN Green tickY Green tickY 5 any 5-8% 5–8% 0-5%
LinkflyExchange.com 2010 Green tickY Green tickY Green tickY 6 any 1–3% 1–3% 1–5%
wmBroker.eu 2008 Green tickY Green tickY Green tickY 11 any 0–3% 0–3% 3–5%
e-forexgold.com 2000 Green tickY Green tickY Green tickY 7 any 2–5% 2–7.5% 3–7.5%
PlanetWM.com 2009 Green tickY Green tickY 7 3 1–5% 1–5% 1–8%
Money Central Market 2007 Green tickY Red XN 2 3 2.99%-4.99% 4.99%-6.99% 0–5%
CurrEx 2007 Red XN Green tickY 3 0 N/A N/A 0–5%
SaveChange.ru 2007 Green tickY Green tickY 5 0 3%–5% 5% 0–5%
Euro Gold Sales 2004 Green tickY Green tickY 2 3 2.5%–4%% 1.9% N/A
ExchEngine 2004 Green tickY Green tickY 5  ?  ?  ?  ?
GoldExchange.eu 2005 Green tickY Green tickY 3 2 1.9–2.9% 1.9% N/A
ecardone.com 2009 Green tickY Green tickY 3 2 1.9–2.9% 4.0% -5%+5%
GoldNow 1999 Green tickY Green tickY 4 9 5% 5% 5%
goldtotem 2005 Red XN Green tickY 4 3 3–5% 0.75–1.5% 1.5–3%
IntlExchange.com 2005 Green tickY Green tickY 9 10 2% 1% 1.5%
citichanger.com 2010 Green tickY Green tickY 5 5 US$2.00 US$2.00 US$2.00
NetPay 2001 Red XN Red XN  ?  ?  ?  ?  ?
ROBOXchange 2002 Green tickY Green tickY 14 0 N/A N/A 1–5%
SpeedyExchange 2003 Green tickY Red XN (answerphone) 7 3 8–13% 1.5–9% 0.3–4.4%
Webmoney.co.nz 2004 Green tickY Red XN 3 1 5–7% 3% 0–5%
Wm-center.com 2005 Green tickY Green tickY 11 3 1.5–6% 1–8% 0–10%

Regulatory issues

In September 2004 several Australian based e-gold currency exchangers voluntarily ceased operation as they did not hold an Australian Financial Services licence (AFSL) [3]. Australian based DCEs that elected to close, due to the Australian Securities and Investments Commission (ASIC) licencing requirements, included:

  • goldex.net
  • sydneygoldsales.com
  • ozzigold.com

In July 2006 Gold Age was closed down by US government authorities following the arrest of the owners, Arthur Budovsky and Vladimir Kats, on account of not having a New York state "money transmitters" licence.

In April 2007, the US government ordered e-gold administration to lock/block approximately 58 e-gold accounts, owned and used by The Bullion Exchange, AnyGoldNow, IceGold, GitGold, The Denver Gold Exchange, GoldPouch Express, 1MDC (a Digital Gold Currency, based on e-gold), and others, and forced G&SR (owner of OmniPay) to liquidate the seized assets [4]. In addition, a few weeks later, e-gold themselves were indicted with 4 indictments. However, e-gold are still in business, and are growing at the rate of approximately 95,000 new accounts per month [5]. Here is the DoJ release [6] and here is the rebuttal by Douglas Jackson, CEO [7][dead link](archive.org copy).

In July 2008, Webmoney changed its rules, that affected many exchangers. Since that time it became prohibited to exchange Webmoney to most popular e-currencies like e-Gold, Liberty Reserve and others: https://newsblog.wmtransfer.com/asp/messages.asp?date=2008-7-23&blogID=6

See also

External links


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