Do we need Gatekeepers in the Decentralized World?
It has been a busy few weeks for businesses like ShapeShift and Changelly. Both platforms came out with some controversial policies regarding how their platforms operate; placing these updated policies in place.
The first news came about on Reddit; when a user of the Changelly service had his Monero (XMR) transaction held because it was classified as “high risk.”
In case you didn't know, Monero is often referred to as a “privacy” coin. This means that the address of the sender and receiver are hidden from the public ledger and not visible. A Changelly spokesperson has confirmed that the exchange can withhold XMR for “suspicious” transactions. Though the company admits it has no prejudice towards XMR, it is “strictly business, nothing personal.” The spokesperson continued to say that, “The matter relates to a Know-Your-Customer procedure that we had to implement due to the increased number of money laundering cases via our service.”
Second in line with sweeping changes was ShapeShift. Launching a new loyalty program called “ShapeShift Membership”. It will require “basic personal details,” according to a blog post.
But why all these changes?
It comes down to government regulations; now that the space has become more mainstream. CEOs and Founders are going to have to accept that we have to work with governments if we want to be successful and adopt policies that work for both parties. That is what why we are seeing these changes today.
CEO of ShapeShift, Erik Voorhees said that “The practice of requiring customers to hand over personal private information is one we’ve struggled with since inception. To the extent that digital asset technology remains a legal grey area, we need to be prudent and thoughtful in our approach as we navigate the regulatory environment.”
Ironically, the concepts of our favorite platforms and cryptocurrencies were built with financial inclusion and privacy in mind. Operating in this space can be a challenge, working with regulators to find a prudent approach to appease government bodies.
We believe that decentralization can still exist, but there needs to be a GateKeeper who can certify you access to the “free-world.”
Allowing access to decentralized exchanges, atomic swaps and other cryptocurrency platforms comes with certain criteria to be cleared here in the United States. As we report in our regulation updates, most government officials agree; since crypto has a monetarily value when being traded that basic Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) policies must be followed.
KYC and AML may be boring to most, but to us at Bridge; we love seeing a problem and finding a workaround. Our community and supporters have begged for something that doesn’t give random foreign exchanges/entities their passport or driver license. This same sentiment is seen here with U.S. based companies involved in the blockchain space.
The phrase KYC to many in the cryptocurrency space, may sound evil; perhaps another government surveillance strategy stronghold. But instead, we use blockchain to better the process to appease governments and individuals in this space we aim to service.
Our system will allow 1–2–3 document and watchlist checks; once we can clear those lists, the payload of data is destroyed from our system. The users now can enter exchanges, ICOs and platforms that require KYC without sending their passport each and every time. The businesses can rest easy knowing that “GateKeeper” requirements have been met and governments can trust that users have been vetted thoroughly.
We can also notate the public addresses of known criminals and are building functionality to coordinate that when initial sign-ups occur. Using national registries for terrorists/criminals and blacklists of blockchain addresses, we can ensure our space is protected. Our users can remain anonymous between transactions with their public address and Bridge Passport.