ShapeShift Removes KYC Requirements Amid Growing Regulatory Clampdowns

ShapeShift, a popular crypto trading platfrom today announced that they are doing away with all kinds of KYC requirements on their platform starting today in an official blog. Erik Voorhees, the CEO of the platform who has tweeted a cryptic message yesterday responded to the tweet about their decision to remove all KYC needs to truly embrace the decentralized protocols.

Tomorrow is here https://t.co/4y1ril0ftc

— Erik Voorhees (@ErikVoorhees) January 6, 2021

The official blog emphasized the need to protect customer’s privacy and how in the US alone every year nearly 20 million citizens fall prey to identity theft. Thus they are doing away with the need for customers to give any of their personal details to use their service.

ShapeShift To Allow Traders to Directly Interact With the Protocol

ShgapeShift noted that as a trading platform and custodian service provider they came under the purview of the Bank Secrecy Act and requires them to collect KYC details. However, now that the firm is doing away with KYC requirements, they are moving towards true decentralization. The firm noted that from now onward.

• Going forward, ShapeShift will not transact with customers.
• Instead, ShapeShift makes it seamless for customers to trade directly with decentralized protocols.
• Because we are ending all regulated activity, we will no longer require KYC.
• And for the protection and dignity of our customers, ShapeShift will integrate decentralized protocols wherever possible going forward.

The firm also cleared that the decision is possible today because of DEX platforms and Defi’s popularity in the past couple of years.

Why didn’t ShapeShift do this in 2018? Decentralized trading protocols were not sufficiently viable two to three years ago. But, they are viable today. The rise of decentralized exchanges, in particular, this year has been truly inspiring. ShapeShift had been a business competitor to these venues, and yet an ally to their mission, and so instead of resisting such beautiful innovation, we will embrace it to better serve our customers.

How Viable is This Move As Regulatory Scrutiny Tightens

ShyapeShift’s recent decision to do away with KYC norms is for sure a commendable move, however, it has come at a time when the regulatory scrutiny from the government is on the rise. Recently, as per a new proposed KYC bill, crypto exchanges would be required to note the personal details of customers for every transaction above $3,000 and personal details in writing for every transaction above $10,000.

Another proposed bill in the form of STABLEAct has also not gone done well with the crypto community as it gives the monopoly back in the hands of central banks. The US is currently acting on several bills concerning digital assets and recently OCC even issued a letter allowing Federal banks to make use of stablecoins and blockchain.