ShapeShift wants to avoid KYC through decentralization

ShapeShift wants to avoid KYC through decentralization

  • ShapeShift moves away from centralization

  • All transactions will now be conducted through a decentralized channel

  • ShapeShift will stop asking for customer verification

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ShapeShift cryptocurrency exchange announces closure as it existed for over six years

ShapeShift wants to avoid KYC through decentralization

Crypto exchange ShapeShift has begun reorganizing its working model with a focus on decentralized technologies. The exchange announced this on its official website.

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ShapeShift users will now be able to trade directly through decentralized protocols instead of a centralized intermediary in the form of ShapeShift. ShapeShift customers also no longer need to verify their identity as part of the Know Your Customer (KYC) requirements..

Decentralized world

ShapeShift founder and CEO Eric Voorhees said that over the past two years, forcing users to verify has become not only “ineffective”, but “unethical and dangerous practice.”.

“In the US alone, about 20 million people suffer from identity theft every year …” added Voorhees.

Initially, the decentralized version of ShapeShift will only support tokens based on the Ethereum blockchain (ERC20). The company hopes to add support for Bitcoin (BTC) and other assets in the first quarter of 2021.

“With a fundamental change in our business, ShapeShift is no longer an exchange or intermediary of any kind,” Voorhees said..

However, in order to trade with fiat, ShapeShift users will still have to go through verification..

ShapeShift wants to avoid KYC through decentralization

Out of sight

Now, according to the head of ShapeShift, the service acts as a purely software interface. Note that a similar business model has already proven itself in the example of Uniswap.

The decision to abandon the centralized business comes against the background of proposals from US regulators to tighten regulation of cryptocurrency exchanges. As a reminder, in mid-December 2020, the Financial Crimes Enforcement Network (FinCEN) proposed to strengthen the surveillance of cryptocurrency wallets.

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In particular, it is proposed to apply advanced methods of the KYC policy in case of withdrawal of funds over $ 3000. Transactions over $ 10,000 must be reported to FinCEN.

In the cryptocurrency community, the FinCEN proposal was received extremely negatively. For example, Square CEO Jack Dorsey has already said the proposed regulations will harm the economic empowerment of individuals..

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