Erik Voorhees-led Bitcoin exchange ShapeShift has decided to shut down its New York City operations, protesting the recently released Bitcoin regulations, CNBC reported today.
The final BitLicense regulation demands that Bitcoin businesses record personal information of its users (through the KYC norm) and the cryptocurrency swapping place is not comfortable violating its policy of not storing any personal information of its customers.
ShapeShift CEO Erik Voorhees told CNBC that, “We either would have to do something we’re not comfortable with or leave New York. It’s a moral and ethical stand we’re going to take.”
The shocking news comes just a day after the founder launched first iOS Bitcoin trading app at the Apple’s World Wide Developers Conference (WWDC). At the launch of the app, the ShapeShift founder had said,
“ShapeShift does not store any currency or user information, thereby eliminating the risk of users’ funds being compromised in a Mt. Gox-type attack. The same security principles will apply to the newly introduced mobile app as well.”
The “Know Your Customer” norm has been imposed upon the Bitcoin companies to curb the use of Bitcoin in fraudulent activities, money laundering and funding of terrorist activities. Voorhees believes that such reasons are not compelling enough to expose the personal information of its valuable customers to a potential data breach.
The New York Department of Financial Services (NYDFS) is, however, not amused. An unnamed spokesperson for the Department said,
“We always recognized that there is going to be some part of this community that is against even pretty standard financial regulatory oversight measures, such as anti-money laundering controls and other consumer protections.”
ShapeShift is willing to cooperate but …
Erik Voorhees said that the regulatory bodies can approach the company to collect information and that, he would be willing to provide wallet addresses, IP logs and information on devices used, but won’t budge on customer names and addresses.
The founder is even willing to take a 1 percent volume hit following this shocking decision.
This is an unfortunate development that New York will lose one of the best Bitcoin companies.