Bloomberg: “Crypto World Rocked After Long-Time Advocate Backpedals … Exchange cites need to navigate the regulatory environment”

The article offers an interesting look at crypto’s version of what the highly regulated (and supervised) mainstream financial industry players have had to negotiate for years: satisfying their customers’ desire for service and privacy, while satisfying their regulatory requirements … however uncertain or fast-changing those requirements may be.

The article begins with:

“It’s a dark day for crypto when one of the best known platforms offering peer-to-peer trading, more in line with the original vision for Bitcoin than centralized exchanges, will start asking users for personal information. Erik Voorhees, chief executive officer of cryptocurrency exchange ShapeShift AG, said in a blog post on Tuesday the platform is launching a membership program, which ‘requires basic personal information to be collected.’ and will ‘become mandatory soon.’”

Bloomberg then reports that:

“ShapeShift is making the move after users requested account-related features such as email notifications, as it’s exploring the ability to tokenize loyalty programs, and as the company recognizes the need to be ‘prudent and thoughtful in our approach as we navigate the regulatory environment,’ according to the blog post. Cryptocurrency watchers have zeroed in on that last item and are speculating Swiss-based ShapeShift has caved to regulators. Asked whether the move was in response to specific regulatory requirements, Voorhees replied, ‘this is a precautionary move to derisk the company amid an ever-changing legal grey area.’ Voorhees did appear to partially side with critics in his blog post, as he said making membership mandatory ‘sucks’ and that ShapeShift still believes individuals deserve the right to financial privacy.”

It has not been a good week for cryptocurrencies. This story, along with reports that Goldman Sachs may be abandoning (or slowing down) its plan to open a cryptocurrency trading desk because of the ambiguous regulatory environment. At last check, Bitcoin was down below $6,500.