‘Re-think’ of smart contract driven fund system means service is closed before it opens, after 18 months of development.
A week or so after announcing a fundamental change to its business model by introducing memberships to its exchange platform, ShapeShift has now announced the closure of its Prism service before it even makes it to open beta.
Prism was a smart-contract driven fund system that – in the words of Shapeshift CEO, Erik Voorhees – enabled “collateralized portfolios of digital assets to be established, giving price exposure to users without counter-party risk and without the need to take delivery, or set up or manage multiple wallets.”
Voorhees himself has heavily implied that last week’s the changes to the Shapeshift business model were forced upon the company, which has previously withdrawn from New York trading, after it implemented its BitLicense regulations in 2015. Indeed, a twitter message from the CEO said last week’s move was “a heavy decision done to derisk under duress”. Later messages then implied that his comments on the matter were being watched very closely, though it wasn’t clear by whom . It all made for curious, somewhat unnerving, reading.
In a regulatory environment where Exchange Traded Funds – to most intents and purposes the same offering as Prism, in that they would allow investors to put money into a fund that tracked the price of a single crypto or portfolio of cryptos – from several different companies have been rejected by US regulators multiple times in 2018, it would be easy to interpret this as another example of the business acquiescing to demands from lawmakers. This could be either to maintain US operations, or to please regulators in Europe, with whom its home country of Switzerland has an economic rapprochement that allows free movement of goods and services.
That’s not, however, how ShapeShift is choosing to frame the move – at least in public.
“It’s become clear to us,” Voorhees says in his blog on the matter, “that there is actually a different (and likely superior) product to be built with this underlying technology.”
However, he continues by saying: “It requires more than a pivot: a reimagining of the product itself.”
ShapeShift will thus close down the prism.exchange site as of October 11th. It was currently at closed beta stage, available to a select number of users. Open beta options were, it would seem, only weeks away. Those with access now have been encouraged to close all their open ‘Prisms’, the funds they have created, at the earliest opportunity.
With crypto markets currently around year-lows, this will likely mean losses for some participants – all open funds will automatically be closed along with the site, however, with the Ether used to create them sent back to the source wallets.