Cryptocurrency change ShapeShift just lately delisted three privateness cash: Sprint, Zcash (ZEC) and Monero (XMR). This was an surprising transfer to say the least, given the change’s historic dedication to privateness.

As a noncustodial platform, Shapeshift didn’t impose person identification necessities on merchants in its early days, though this started to vary with the gradual introduction of a compulsory membership mannequin, compliant with Know Your Buyer guidelines, as of 2018.

Why then, did it transfer to delist Sprint, Zcash and Monero, at the same time as different exchanges reminiscent of Coinbase, Kraken and Binance.US nonetheless listing these cash? In a press release shared with Cointelegraph, the chief monetary officer of Sprint Core Group, Glenn Austin, mentioned he discovered the delisting “notably irritating as a result of [it] might have been solely averted by a easy 10–15 minute name.” 

Austin believes the delisting boils all the way down to “an academic situation.” Whereas the explanations for the delisting haven’t been formally clarified, Austin has speculated that the transfer could also be influenced by the foreign money having been talked about twice within the Division of Justice’s just lately printed “Cryptocurrency Enforcement Framework.” 

In each instances, Sprint was cited alongside Monero and Zcash for instance of an anonymity-enhanced cryptocurrency. The DoJ recognized using such currencies as a “high-risk exercise indicative of potential legal conduct.”

Sprint’s argument is that its foreign money is just not really a privateness coin. The group cites main regulation agency Perkins Coie’s assessment in September 2019 that “the widespread notion that Sprint is a ‘privacy-coin’ is probably going a legacy of its former ‘Darkcoin’ moniker and doesn’t precisely mirror its precise performance.” Perkins Coie has argued that Sprint has the identical performance on this regard as Bitcoin (BTC). Austin defined:

“There are numerous privacy-enhancing strategies that may be applied on prime of any public blockchain together with options like off chain-transactions, shielding addresses or quantities, Mimblewimble, tumbling/mixers, and Coinjoin. CoinJoin is the one privateness function that at present exists in Sprint wallets. Bitcoin additionally has many wallets that assist CoinJoin.”

Chainalysis, a number one blockchain analytics agency, agrees that from a technical standpoint, privateness coin is “a misnomer for Sprint.” The agency, which provides investigation and compliance assist for the Sprint Core Group, has emphasised that “unbiased pockets software program supplies extra superior types of CoinJoin which can be getting used with main cryptocurrencies not labeled as privateness cash, reminiscent of Bitcoin, Bitcoin Money and Litecoin.”

Austin goes even additional with this argument. Past his emphasis on misconceptions surrounding Sprint, he argues that the assist of off-chain transactions with Bitcoin through Lightning Community in addition to Bitcoin’s prevalence in darknet markets make it the next threat from a regulatory perspective. Furthermore, software program reminiscent of Chaumian CoinJoin, which can be utilized with Bitcoin wallets however not Sprint ones, are an much more refined technique of obscuring information from different individuals within the community, he says.

“We did current all of this data to FinCEN but it surely seems the message by no means filtered by to the DoJ,” Austin mentioned. The corporate has additionally reached out to ShapeShift and says it would proceed to pursue the matter till it has been resolved.