Multichain DEX aggregator ShapeShift has revealed its support for shielded (private) transactions using the Zcash privacy cryptocurrency.
In a Thursday announcement shared with Cointelegraph, ShapeShift’s self-custodial decentralized exchange (DEX) aggregator and wallet have now integrated Zcash (ZEC) shielded transactions. This news comes as Zcash Community Grants awarded $50,000 to bolster ShapeShift’s technical and marketing efforts.
The announcement states that this initiative aims to “provide genuine on-chain privacy for its users.”
This action follows ShapeShift’s decision to delist privacy coins, also known as anoncoins, in 2020 due to regulatory scrutiny. At that time, ShapeShift functioned as a centralized instant exchange before evolving into a DEX aggregator and eradicating Know Your Customer requirements the subsequent year.
“Incorporating shielded ZEC into ShapeShift DAO broadens access to unstoppable private money,” stated the Zcash community grants team. “It offers the ShapeShift community a decentralized avenue to acquire and utilize ZEC without depending on centralized exchanges, perfectly aligning with the principles of privacy, freedom, and self-custody for which Zcash was created.”
Related: EU to ban anonymous crypto accounts and privacy coins by 2027
The infrastructure
A ShapeShift decentralized autonomous organization (DAO) representative mentioned in the Zcash forums that “ShapeShift today is a DAO, not the centralized company that [it was] back in 2016.”
“Previously, regulatory pressures led to ZEC being delisted, but that was under a completely different structure. Now, ShapeShift DAO is governed by the community, fully transparent, and operates in public.”
ShapeShift uses a node network provided by blockchain infrastructure company Liquify for execution. The DEX aggregator has also revamped the application interface “into a sleeker, Uniswap-style swapper optimized for mobile.”
Related: Zcash founder joins Shielded Labs, advocates for hybrid PoS upgrade
Crypto privacy faces mounting pressure
Arthur Firstov, chief business officer at crypto payment processor Mercuryo, stated to Cointelegraph that “privacy is the foundation of trust.” Zcash utilizes zero-knowledge proofs (ZK-proofs) to facilitate optional shielded transactions, thereby keeping the amount transferred, sender, and receiver confidential.
Since its launch in late 2016, ZK-proofs have gained traction as a significant area of development. Firstov elaborated that such “proofs enable a user to demonstrate that something is true without exposing their data.”
However, applications that emphasize financial privacy frequently encounter pushback from regulators. According to reports from mid-September, the European Union’s extensive Anti-Money Laundering regulations seem poised to prohibit privacy-maintaining tokens and anonymous crypto accounts beginning in 2027.
Some analysts suggest that regulation may exacerbate the situation. Ki Young Ju, CEO of crypto analytics firm CryptoQuant, mentioned in May that censorship-resistant “dark stablecoins” might see increased demand as governments intensify their scrutiny of the industry.
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