Popular “membership-free” exchange ShapeShift has unexpectedly added member accounts. For now, the accounts are optional, but they will eventually become obligatory for all users of the exchange. ShapeShift promises better rates and FOX token rewards to users who create an account.
It’s Already An Unpopular Move, Even With CEO Erik Voorhees
Although ShapeShift also plans to implement some form of KYC procedures, CEO Erik Voorhees acknowledged, “That last detail sucks.” Perhaps he expected that the new development would get some backlash from dedicated users of the platform and he was correct. Several Twitter users responded to this news by saying that they were moving over to competitors like Changelly.
Centralization is also a concern for exchange users that value their privacy. Most decentralized exchanges, like IDEX, do not require anything more than access to a private key. Unfortunately, none of them allow for fiat-to-cryptocurrency exchanges.
If there’s a decentralized exchange that doesn’t limit itself to tokens based on platforms like WAVES and ETH, I’m not aware of it. This may mean an opportunity for a developer team that is willing to create a “decentralized ShapeShift” that allows for instant swapping between top cryptocurrencies along with tokens. Until then, many ShapeShift users have indicated willingness to wait until direct atomic swaps become a regular thing.
Others were more inclined to reserve judgment, as ShapeShift has lasted years without appearing to cave to regulators and its top brass may simply be concerned about being able to operate legally. Ryan Selkis was one of the more reserved individuals, issuing the following tweet on the matter:
“I’ve met lots of crypto folks with questionable intentions, but @ErikVoorhees is not one of them. Haven’t fully digested the SS “membership” pros/cons, but it’s surprising. My $ is on this being a) well-intentioned (withhold judgment y’all) & b) critical to avoid legal issues.”
Voorhees remains opposed to getting one of New York’s BitLicenses. However, this may not help ShapeShift keep users who say they put up with its high fees because they value anonymity.
How Will This Affect Mobile Apps That Work With ShapeShift?
Besides the legality, an instant thought I had is that ShapeShift’s new membership requirement would impact mobile apps like Coinomi that integrate ShapeShift’s API. When I asked Voorhees on Twitter, he responded with:
“We’ve been in talks with partners for a while – there is new API endpoint for verification of user, thus after one login, user can use partner service with benefits of Membership (better rates, accumulation of FOX, etc).”
It would be interesting to see what this new API looks like. At best, it’ll be easy to log in with none of the typical “I’m sure I typed my password in right” type errors. At worst, it’ll get in the way of making a quick coin swap when an investment opportunity is spotted or when users want to swap to another coin to make a purchase.
Overall, this means ShapeShift is likely to become like any other regulated exchange with perhaps higher fees and certainly fewer users. Many of its longtime supporters are likely to bail to its competitors because they like their privacy and see this as caving to regulators. Others will wait until direct atomic swaps allow them to ditch exchanges altogether. ShapeShift may survive, but only in a very different form from the original version that enabled users to swap coins anonymously.