ShapeShift, a popular cryptocurrency exchange based in Switzerland, terminated its services in New York today, due to the state’s BitLicense regulations for digital currencies. Erik Voorhees, Shapeshift Founder and CEO, told CNBC:
"We either would have to do something we're not comfortable with, or leave New York. It's a moral and ethical stand we're going take."
Voorhees has decided not to to comply with the BitLicense, explaining that ShapeShift is not willing to take the risk of exposing its users’ personal information, leaving them susceptible to potential data breaches or hacking attacks. The exchange is known for its ease of use because it doesn’t require users to create accounts.
The New York Department of Financial Services (NYDFS) responded to ShapeShift’s announcement. Their spokesman stated:
“We always recognized that there is going to be some part of this community that is against even pretty standard financial regulatory oversight measures, such as anti-money laundering controls and other consumer protections. That said, one digital currency company has already received a license from NYDFS and a number of others have stated they intend to seek BitLicenses shortly. Ultimately, we believe that prudent regulation will be important to building greater consumer confidence in digital currency and sparking wider adoption.”
Voorhees pointed out the "epidemic" of identity theft. He said:
“Identity theft is ... more costly to society than many other forms of theft and crime. It is pervasive because the antiquated financial system — based on credit cards and banks — only works when personal information is attached to your transaction. Bitcoin has finally solved this problem, by enabling 100% secure transactions without attaching your private information. Now, New York wants to mandate that consumers continue to be put at risk, even though technology has provided a solution.”
In response, he announced the creation of a new website campaign called PleaseProtectConsumers.org. The website headers says, "Censored jurisdiction ... due to regulations which mandate the extraction of your personal, private information. This jeopardizes your safety, so we refuse to do it." So far, Shapeshift is listed as the only participating organization, but others may soon join their protest.
Andreas Antonopolous showed support for Voorhees on Twitter:
Kudos to @ShapeShift_io for refusing to become a honeypot of PII just to satisfy NY regulators. t.co/Zc2cupWgCk
— AndreasMAntonopoulos (@aantonop) June 11, 2015
According to the NYDFS, the set of regulations for digital firms were issued to avert fraud, money laundering and “funding for terrorism,” and to uplift consumer confidence.
While Shapeshift refuses to collect and provide personal information about its users, they say they would be willing to provide IP logs, wallet addresses and general information on the devices that access the exchange, if authorities take the necessary steps and meet the legal requirements for requesting such information.
The company recently created the first iPhone app for trading “every major” digital currency, and they also offer users the ability to buy gold and altcoins, “avoiding fiat entirely.”