The digital asset exchange platform will cease to transact with customers, instead enabling them to trade directly with decentralised protocols
Swiss digital asset exchange platform ShapeShift announced in a press release yesterday it had integrated decentralised exchange protocols into its platform to increase transparency in the digital asset economy and better protect users.
Instead of ShapeShift acting as an intermediary, customers will now be able to trade directly with these external protocols. This will eliminate the need for users to supply personally identifiable documents to meet the Know Your Customer (KYC) regulatory requirements for trading, thereby improving security and privacy, as well as providing traders with greater transparency over their order flow.
The company reluctantly adopted KYC policies back in 2018, after four years of privacy-focused operation without them. However, ShapeShift always believed that the collection of personal information was unethical and dangerous. Indeed, the widespread storage and transfer of Personally Identifiable Information (PII) results in about 20 million cases of identity theft a year in the US and more than $17 billion of annual losses, according to estimates by the Department of Justice.
Erik Voorhees, CEO of ShapeShift, said, “The pace of innovation in decentralized technology is inspiring. These borderless, open source projects have created a far safer user experience, so we’ve decided to integrate them into ShapeShift’s platform going forward.”
Decentralised exchanges (DEXes) tend to offer lower fees and reduce counterparty risk, in addition to providing users with control over their digital assets and auditability, so it is unsurprising that their popularity has increased during the last year.
Voorhees added, “Centralized exchanges are black boxes: there is no way to audit them from the outside. You have to trust the operators of that exchange and any other party that can access that data, and that trust is often breached. Our goal is to protect people and bring transparency to the financial system. This is open-source finance.”
ShapeShift customers will now be presented with superior pricing as multiple DEXes provide them with access to deep digital asset liquidity across more than a thousand new assets. These include Ethereum and ERC20 assets as of yesterday, while Bitcoin (native BTC, non-wrapped) will be added in the first quarter of 2021. As well as having access to the best rates across multiple venues, ShapeShift users can also earn FOX tokens on every trade.
This move represents a return to ShapeShift’s original philosophy and might be enough to entice back customers who previously abandoned the platform in favour of more private exchanges.