Non-custodial crypto trading platform Shapeshift has introduced a membership program which will soon be mandatory. CEO Erik Voorhees explains that his exchange will have to begin collecting basic personal information of its users, and there will be five membership levels.
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Shapeshift Membership Mandatory Soon
Shapeshift’s founder and CEO, Erik Voorhees, announced on Tuesday the launch of Shapeshift Membership.
“Shapeshift Membership is a loyalty program,” he described, adding that the benefits depend on the membership level which “may include higher trading limits, rewards on trading volume, better pricing, private market and trade data, and early access to new coins, products and services.” The CEO elaborated:
Today, membership is optional, but it will become mandatory soon…Membership requires basic personal information to be collected.
On its website, Shapeshift emphasizes that without user personal information, it “would not be able to offer higher order limits and would not be able to serve as many jurisdictions.”
The change will also affect integrated wallet services. Replying to a Twitter user’s question, “If Shapeshift membership will soon become mandatory, how does this affect in-wallet exchanges” such as Jaxx and Exodus? Shapeshift explained:
If you are using a wallet that integrates with Shapeshift, you will need to authenticate once through the wallet to enjoy the benefits of your membership and to then use the http://shapeshift.io service.
Users Express Disapproval
Soon after Voorhees’ announcement, many industry participants stormed Twitter to comment on the change. Among them was Bitcoin Core developer Peter Todd. He quickly predicted, “Shapeshift bites the dust.”
Another Twitter user said he used the exchange because of the “Lack of AML/KYC [anti-money laundering/know your customer].” However, with Shapeshift “getting AML/KYC bullshit,” he declared, “Guess there’s no reason to use Shapeshift anymore. The only reason to gather data is to whore it to other vendors…and potentially lose it to hackers.”
A third Twitter user commented, “thanks for all you’ve done @Shapeshift_io, but I’ll [be] using another service from now on. You have destroyed your primary use-case.”
Why Shift to Membership Model
Voorhees detailed three driving forces for his platform’s shift from being “the exchange without accounts” to an account-based model.
Firstly, he claims that many users have requested account-related features such as transaction history, whitelisted addresses, and email notification.
Secondly, “our increasing interest in the broad phenomenon of tokenization – the ability to ‘financialize’ and bring liquidity to various aspects of business/customer relationships,” he wrote.
Finally, Voorhees emphasized the “need to be prudent and thoughtful in our approach as we navigate the regulatory environment,” noting that “the practice of requiring customers to hand over personal private information is one we’ve struggled with since inception.”
Five Levels of Membership and FOX Tokens
Voorhees described five levels of membership. “Level 1 is available now, and is free and open to everyone,” he confirmed. The transaction limit for this level is $10,000 with a $50,000 monthly cap on volume.
“Levels 2-5 will be available later, and enable benefits on higher amounts of volume,” Voorhees added. These levels “are optional and require FOX tokens,” standard Ethereum-based tokens “which will have a number of features and functions when they become available,” Shapeshift’s website clarifies.
The exchange elaborated:
Membership levels 2-5 require a user to hold various amounts of this token, and FOX is additionally used as a reward for members in various ways. Membership levels 2-5 are not yet available, but will be in the future.
What do you think of Shapeshift moving to a membership model? Would you still use Shapeshift? Let us know in the comments section below.
Images courtesy of Shutterstock and Shapeshift.
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