Popular instant cryptocurrency exchange ShapeShift has just announced that they will be launching a new membership program. The company describes it as a loyalty program in which those who conduct trades on the platform can earn FOX tokens. While details have not yet been released, the company suggests that owning a certain amount of FOX tokens could allow for higher tiers of membership and greater rewards such as lower fees or higher trading caps. Unfortunately, the introduction of this membership system is not all positive, and it’s got some people (including privacy advocates) worried.
The ShapeShift Way
For those unfamiliar, ShapeShift is a cryptocurrency exchange that does not require an account. Instead, users select a deposit currency and a receive currency. Once the system receives a deposit, the desired token or coin is automatically sent to the designated address. In simple terms, you choose what you’re sending and what you want in return, and the trade can be made without signing up for an account. Another major benefit to this model is that it is immune to many types of hacking attempts because the exchange does not hold users deposits for extended periods.
ShapeShift does have its limitations, however, such as a somewhat limited offering on support coins and tokens, and at times they charge higher fees than other more traditional exchanges. Additionally, the fees that ShapeShift charges are highly opaque, and are not abundantly clear or flat. Futhur, in times of great demand, some coins or tokens may become unavailable for extended periods.
In any case, ShapeShift has changed cryptocurrency as we know it, and a number of wallets support ShapeShift integration natively. There are also a number of competing sites that offer similar services.
The Membership Program
The membership program which has already launched is currently voluntary. This means if you want to continue using ShapeShift is normal, you do not need to sign up for the membership. More on that later.
Signing up for a membership is fairly easy, but you will find upon entering your dashboard that the site starts demanding personal information such as your legal name, address, and government issued ID numbers. We tried to sign up and verify an account, but we found that the site would immediately reject the personal information we submitted and we were unable to move further.
Read also: Changelly Vs ShapeShift
As described in a blog post, the membership works on a tier-based system where users can earn FOX tokens by conducting trades on the platform. Presumably, these tokens can also be purchased directly on various open markets as it is simply an ERC-20 token. As the user holds higher amounts of these tokens in their account, they will achieve higher levels of service which will reduce exchange fees and potentially increase daily trading caps.
Not All Rainbows and Unicorns
In what ShapeShift is calling an attribute of the new program which “sucks”, the membership system will eventually become mandatory.
Membership requires basic personal information to be collected. Today, Membership is optional, but it will become mandatory soon.
What is unclear though, is whether or not such mandatory memberships will need to pass KYC checks in order to be eligible just for basic trading and not advanced bonuses and features of the platform such as the reduced fees.
This move has of course raised a number of eyebrows. Specifically because ShapeShift has been known as a way to anonymously make exchanges. While the company undoubtably keeps their own records and exchanges can be traced, the fact that they didn’t require a sign up much less KYC checks, at least some degree of anonymity was baked into the system. That will be changing soon, however, once the membership system becomes mandatory.
It is this writer’s opinion that for whatever reason, ShapeShift was compelled or pressured to instigate mandatory KYC checks for all customers. They cooked up this membership program in an attempt to add a spoonful of sugar to the bitter pill that is actually being swallowed by all future ShapeShift users.
The company has not made any comment in this regard as to whether or not they are being pressured by an outside force.
Privacy Seekers Will Move On
If ShapeShift is able to continue offering desirable products and services then they will likely continue to have a steady stream of customers. Coinbase, for example, requires full KYC verification and they seem to have no trouble finding new users and customers on an hourly basis.
For those of us who value privacy, anonymity, and financial freedom, it’s quite likely that we will need to find a new frontier that will continue to respect anonymity.
So far, other instant exchange services have not instituted or even suggested that they are instituting in the future this kind of ID verification scheme. Not only that, but some are already offering loyalty tokens with each exchange made. One example is the site changenow.io, which offers its customers NOW tokens with each exchange made on the platform.
However, ShapeShift is still by far the biggest player in the instant exchange industry and so it would take a lot to unseat them from their current enviable position.
It is also possible that as we get closer to mainstream adoption (though that’s still pretty far off) our wild west mentality of wanting privacy could go the way of the dinosaurs someday. But for now, while we have the option of maintaining anonymity, we should do our best to keep it.
