ShapeShift: KYC destroys business model

Interview with Voorhees

ShapeShift will soon have to look for a new business model, as CEO Eric Voorhees hinted in an interview. Voorhees, an entrepreneur who has been active in the crypto scene for a long time, sees the problem primarily in the introduction of the KYC process.

By the end of 2018, the company had to properly record all its customers, as required by the anti-money laundering laws that are widely applicable internationally. Now Voorhees said that the number of active users of their own service had collapsed to almost zero. The reason for this was that most wallet services used ShapeShift to convert their users. Since these services would otherwise also have had to demand a KYC from their customers, they stopped using the ShapeShift API. However, these services accounted for the lion's share of ShapeShift customers.

What will the future bring?

The fact that the Swiss company was getting worse was already evident at the beginning of 2019. In January, ShapeShift had to lay off a total of 37 employees in order to meet the changing demands of the market. According to ShapeShift's own figures, this represented around one third of the total workforce.

Now the company has to reinvent itself in order to survive. This could presumably also be the company's own wallet services, which could also enable crypto currencies to be exchanged on-the-fly as part of a bill of exchange transaction.

A company in its first hours

ShapeShift has been active in the crypto currency market since 2013 and is therefore one of the oldest companies in this field. With its service, ShapeShift makes it possible to switch between crypto currencies.

Until the end of 2018, users did not have to maintain an account, but only had to have wallet addresses of the desired currencies. This made it possible to switch between different crypto currencies very quickly and easily. Since the introduction of the KYC procedure, which is mandatory, all users have to provide personal information. ShapeShift was accused of money laundering in September 2018.

These accusations were substantiated in an article in the Wall Street Journal. However, according to a recent study commissioned by ShapeShift, the questionable sums are much smaller.

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