ShapeShift criticized for mandating KYC norms for its members

ShapeShift exchange a global trading platform for a variety of digital assets has made a controversial move by introducing Know your Customer (KYC) guidelines. Now the users have to provide their real identities if they want to use the services. ShapeShift exchanges one cryptocurrency for another without ever collecting customer funds into the company’s account. It is unique among digital currency trading companies.

Earlier the company does not require personal information of its customers. In October 2016, privacy policies of ShapeShift stirred controversy when the company revealed that it is collecting as little information as possible to enable the blockchain technology. To do a transaction on ShapeShift the users did not have to submit their personal data such as their name, address, location, and email id. The users just have to send funds to a specific address which serves as order and receipt.

Recently the CEO of ShafeShift, Eric Vorhees Twitted:

“Membership requires basic personal information to be collected. Today, Membership is optional, but it will become mandatory soon.”

The move taken by the company is criticized by the crypto enthusiasts all over the world. The company has struggled to get the personal information of its members since inception. According to Eric, there are some reasons for taking this decision such as the relationship between accounts and tokenization, an increasing number of users are asking for account-based features, and regulations. Eric also stated that digital assets have a legal grey area but we have to work in a regulatory environment.

People all over the world deserve financial privacy and digital currencies are offering anonymity, privacy, and personal security to its users. But after the new rule, the privacy of their members will be at risk. Eric Vorhees also said that users with complete KYC will get loyalty rewards, discounts, and higher transaction limit.

Twitter was flooded with the messages from the crypto enthusiasts who are disappointed by the move of ShafeShift. According to securities and defence litigation lawyer Jake Chervinsky, the concept of crypto exchanges is a genuine nightmare for the regulators who are relying on financial surveillance. The lawyer also believes that ShapeShift was threatened by a bureau of US Treasury Department, FinCen.