Why ShapeShift Delisted Privacy Coins: What You Need to Know

A Shocking Turn of Events

In a move that caught many off guard, cryptocurrency exchange ShapeShift recently delisted three well-known privacy coins—Dash, Zcash (ZEC), and Monero (XMR). This decision stood in stark contrast to the platform’s historic commitment to privacy. It seems like that one friend who swore they’d never go vegan but suddenly shows up at the barbecue with a plate of soy burgers.

Changing Tides at ShapeShift

Initially, ShapeShift was a noncustodial platform that didn’t require user identification when trading. But slowly, starting in 2018, the winds changed direction with the introduction of a mandatory membership model that aligned with Know Your Customer (KYC) regulations. To put it lightly, it was like trading in a sunny beach for a corporate office cubicle—with no windows.

Why the Delisting?

So, what prompted this decision to part ways with privacy coins while other exchanges like Coinbase and Kraken maintain their listings? Glenn Austin, CFO of Dash Core Group, expressed his frustration, suggesting that a simple 10-15 minute conversation could have clarified things and possibly prevented the delisting.

Austin hinted that this situation boils down to an “educational issue” rather than a straightforward regulatory breakdown. Notably, Dash was recently mentioned in the Department of Justice’s “Cryptocurrency Enforcement Framework.” Alongside its privacy coin companions, it was flagged as a high-risk asset, which raised eyebrows across the crypto community.

Understanding Dash’s Position

Here’s where things get a bit murky. Dash argues that it shouldn’t be labeled a privacy coin. Their defense cites the legal firm Perkins Coie’s 2019 assessment claiming that the perception of Dash as a privacy coin largely stems from its former name, ‘Darkcoin.’ Austin made the case, stating, “Dash has the same functionality in this regard as Bitcoin (BTC).”

• Dash offers features like CoinJoin.
• CoinJoin allows for privacy enhancements similar to other cryptocurrencies.

Chainalysis, a reputed blockchain analytics firm, has also chimed in, stating that calling Dash a privacy coin is indeed a misnomer. They noted that advanced privacy techniques are available for major coins not classified as such, proving that the world of cryptocurrency is a tangled web of misconceptions.

Comparative Risk Factors

Austin takes it a step further, suggesting that Bitcoin’s association with darknet markets makes it a higher regulatory risk than Dash. On top of that, software such as Chaumian CoinJoin—used only with Bitcoin wallets—offers even more robust methods to obscure transactions and data. Truly, it’s the irony of the century when the “open” currency like Bitcoin has individuals devising complex coding designs for transaction privacy.

In Pursuit of Clarity

Dash Core Group has made efforts to communicate these nuances to FinCEN, but alas, it seems like their message didn’t quite reach the DOJ. Until this issue gets resolved, they’re keeping the lines open with ShapeShift, engaging in discussions that they hope will lead to a better understanding of the Bitcoin and privacy coin landscape.

In the crypto space, clarity is key, and like Austin suggests, an open dialogue could be the solution everyone is looking for. Or at the very least, it might prevent other exchanges from unexpectedly swiping left on their beloved anonymity.