Cryptocurrency exchange company ShapeShift recently removed three privacy coins: Dash, Zcash (ZEC), and Monero (XMR). This was, to put it mildly, an unexpected move given the stock market’s historic commitment to privacy.
As a non-custody platform, Shapeshift initially does not enforce vendor identification requirements, although this has begun to change since 2018 with the gradual introduction of a mandatory membership form in line with Know Your Customer rules.
Why did he switch to writing off Dash, Zcash and Monero while other exchanges such as Coinbase, Kraken, and Binance still list these coins? In a statement released to Cointelegraph, Dash Core Group CFO Glenn Austin said the write-off was “especially frustrating” as it could have been avoided entirely with a simple 10-15 minute conversation.
Austin thinks the graduation comes down to the “education issue.” While the reasons for the delisting have not been formally clarified, Austin suggested that the move could be influenced by the currency twice mentioned in the “cryptocurrency implementation framework” recently released by the Justice Department.
In any case, Dash, along with Monero and Zcash, is cited as an example of anonymous cryptocurrency. The Department of Justice has defined the use of such currencies as “high risk activity indicative of possible criminal behavior.”
Dash’s argument is that currency is not really a privacy coin. The group cites a September 2019 opinion from major law firm Perkins Coie that “the notion that Dash is a ‘privacy currency’ is likely a legacy of the previous moniker ‘Darkcoin’ and does not accurately reflect its actual function.” Perkins Coie argued that Dash has the same features as Bitcoin (BTC) in this regard. Austin explained:
There are many privacy-enhancing technologies that can be implemented on any public blockchain, including features such as offline transactions, addresses or secured amounts, Mimblewimble, mute / mixer, and Coinjoin. CoinJoin is the only privacy feature currently available in Dash wallets. Bitcoin also has several wallets that support CoinJoin. ”
Chainalysis, a leader in blockchain analysis, agrees that, technically speaking, the privacy currency is “the wrong name for Dash.” The company, which provides investigative and compliance support to the Dash Core Group, has assured that “the offline wallet program provides more advanced forms of CoinJoin that are used with major cryptocurrencies that are not designated as privacy currencies such as Bitcoin, Bitcoin Cash. and Litecoin “.
Austin goes further with this argument. In addition to focusing on the misconceptions surrounding Dash, he argues that supporting off-chain transactions with Bitcoin through the Lightning Network, as well as Bitcoin’s proliferation in dark web markets, makes it more risky in terms of regulation. In addition, he said, programs like Chaumian CoinJoin, which can be used with Bitcoin wallets but not Dash wallets, are a more sophisticated way to hide data from other network members.
“We passed all this information to FinCEN, but it looks like the letter never reached the Justice Department,” Austin said. The company has also reached out to ShapeShift and said it will continue to review the case until it is resolved.