ShapeShift’s Memberships Are the End of an Era
ShapeShift, known for years for its no-questions asked instant transmissions has announced a new feature: mandatory memberships.
The move isn’t immediate and they promise it will come with new features, but it is sure to disappoint many. Shapeshift was a near revolution when it launched and it quickly became a mainstay of the cryptocurrency industry. While they weren’t always the cheapest way to purchase coins, they offered a quick, simple and fairly anonymous way to change coins quickly.
The memberships will require personal information.
The move, it seems, is in response to the current popularity of ICOs. There is no indication in the announcement that Shapeshift was pressured or forced by law enforcement to make the move. But it does seem that they are responding to the current regulatory situation.
“The practice of requiring customers to hand over personal private information is one we’ve struggled with since inception. To the extent that digital asset technology remains a legal grey area, we need to be prudent and thoughtful in our approach as we navigate the regulatory environment.”
ShapeShift also gave two other reasons for the decision.
Adding memberships does allow ShapeShift to offer services they haven’t in the past, but the most controversial will likely be their Ethereum based FOX token. Billed as a sort of loyalty program, the FOX token is supposed to enable users to have higher transaction volumes and lower fees.
Eventually, there will be five membership levels, level 1 is the only level available now and “is free and open to everyone” according to the announcement.
Levels 2-5 will be based on how many FOX tokens the user holds. The specifics of the benefits and levels have not been announced.
The FOX token is interesting. Crypto tokens as a reward program is something that has been talked about for years. Exchanges have done it in the past but ShapeShift isn’t exactly a traditional exchange. It isn’t that far off and mandatory membership makes it more like a traditional exchange, but it could demonstrate a use case for other companies.
But more important is what this will mean for accessible cryptocurrency privacy. ShapeShift didn’t provide the type of privacy that would thwart a dedicated and targeted surveillance from law enforcement. But it was extremely private for how accessible, open and known it was. Using ShapeShift and a few privacy minded tools like TOR was probably enough for most law abiding users.
ShapeShift was a master of walking the line. In these past few years they have enabled virtually private chain swaps, while standing in the open and being considered one of the most respectable companies in the industry. While most exchanges moved towards more KYC/AML, they simply never accepted any kind of fiat money and because of that lack of interaction with the fiat system, were able to avoid its trappings. That they somehow did that while looking straight into the face of the square fiat community makes it more impressive. They sponsored hackathons next to Microsoft. They raised millions of dollars. Meanwhile they offered the kind of privacy traditional exchanges couldn’t hope to match.
It isn’t clear if the Memberships are to make the FOX token possible, or if Memberships were coming anyway and the FOX token is a way to soften the blow. Either way, it is a blow for privacy advocates.
I don’t blame ShapeShift, assuming the FOX token wasn’t the main motivation. It is reminiscent of the recent ROM site closures, only ShapeShift isn’t shutting down and wasn’t illegal. But it is changing and its past service was rare. But they fought the good fight. And even if they didn’t technically fight it for as long as they could, they still fought it for longer than anyone else.
The next question is will a newcomer fill ShapeShift’s old niche?
We have reached out to ShapeShift about the FOX token and will add any response we get.