In brief
- Monero and Dash are no longer available on ShapeShift’s trading platform.
- Monero is the world’s most-popular privacy coin, while Dash has optional privacy features.
- US government agencies have hired blockchain firms to trace Monero transactions.
We do the research, you get the alpha!
ShapeShift has delisted prominent privacy coin Monero from its platform, a ShapeShift spokesperson told Decrypt via Twitter. It’s also delisted Dash, a Bitcoin Cash competitor with optional anonymity features.
Unlike standard cryptocurrency exchanges, ShapeShift is a portal for buying, selling, and trading cryptocurrencies while maintaining ownership of one’s private keys.
Founded in Switzerland, which is well-known for banking laws that protect financial privacy, ShapeShift has a history of thumbing its nose at governmental intrusions. For instance, it ceased offering services in New York state in 2015 rather than comply with state regulations mandating that digital currency firms record certain user details. It later pulled services from Washington state because of similar regulations.
While ShapeShift did give in to regulators slightly in 2018 by starting to comply with “know your customer” rules, privacy coins would nonetheless seem to be a good fit philosophically for ShapeShift.
Monero, which trades by the initials XMR, is the largest privacy coin by market cap, worth upwards of $2 billion. Transactions on the Monero blockchain are obscured through a coin mixing process, making it difficult for others to see wallet addresses of the sender or recipient or even the amount. That’s quite the opposite of Bitcoin, which allows anyone to view pseudonymous transactions.
Monero’s in-built privacy makes certain elements within the US government uncomfortable, especially because XMR is a favorite of hackers. And they’re looking to crack potential vulnerabilities in the mixing process to make transactions more transparent.
The Department of Homeland Security contracted blockchain forensics firm CipherTrace to create a way to trace Monero transactions. CEO Dave Jevans told Mathew Aron, host of The Decrypt Daily, that his firm was able to develop a probabilistic approach to determining addresses involved in transactions. Hoping to get something more solid, the IRS paid CipherTrace competitors Chainalysis and Integra FEC a total of $1.5 million to develop their own solution for cracking Monero.
For reasons like these, major US exchanges such as Gemini and Coinbase have not made Monero available for trading, despite the fact that it’s the 14th-largest cryptocurrency by market cap and does healthy trading volumes elsewhere. (Monero is, however, available on US-based exchange Kraken.)
In July, Coinbase CEO Brian Armstong indicated there’s regulatory pressure for crypto firms to not offer XMR:
“A lot of it is behind-the-scenes conversations where [regulators] are kind of saying: ‘We very much don’t think you should do this. And then we have the conversation: ‘Well, are you telling us that you don’t like it, or are you telling us that you are going to sue us if we do it?’”
It’s unclear whether removing Monero from the platform was a business decision for ShapeShift or a regulatory one. ShapeShift founder and CEO Erik Voorhees told Decrypt, "We chose to delist Monero months ago, but I cannot provide further comment on why at this time."
Tim Copeland contributed reporting for this article.
Editor's Note: This article has been updated to include comments from ShapeShift CEO Erik Voorhees.