On Thursday, ShapeShift announced that it is going to stop its service in New York state because it does not wish to comply with the recently issued BitLicense.
So, one of the rules that ShapeShift.io refuses to accept is to register the personal information of all users. Obviously, this requirement is the best way to prevent fraud, terrorism and money laundering. However, it also would expose ShapeShift clients to a potential personal data leakage.
In fact, the BitLicense is considered to be “too stringent and restrictive of innovation”, according to Fortune.
Erik Voorhees, ShapeShift CEO, 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. We’re not going to spy on thousands of people purely to make their job a little bit easier. Disclosing customer’s IP and wallet addresses is one thing, but names and home addresses are a different matter entirely.”
At the launch of the first iOS Bitcoin trading app at the Apple’s World Wide Developers Conference, the ShapeShift founder noted:
“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.”
Last week, when the Bitlicense was finalized, Mr. Voorhees tweeted “California is winning.” Meanwhile, Roger Ver, ShapeShift investor, tweeted:
— Roger Ver (@rogerkver) June 3, 2015
The New York Department of Financial Services doesn’t seem to be surprised. An unknown 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.”
The New York’s Department of Financial Services expected such a reaction from their BitLicense proposal. Despite the fact that ShapeShift.io declines the regulation, several other firms have been looking to get an approval for a license to legally function in the state of New York.
“Ultimately, we believe that prudent regulation will be important to building greater consumer confidence in digital currency and sparking wider adoption,” the spokesman added.
Still, customers from the New York area who may want to use the ShapeShift.io website, will be redirected to PleaseProtectCustomers.com.