On Tuesday, Erik Voorhees, CEO of cryptocurrency exchange service ShapeShift, announced his company’s new Membership Program. Users who create an account and verify their identity will get access to features and benefits including transaction histories and discounts. The catch came late in the announcement: While membership is optional for the moment, it will become mandatory “soon.”

Voorhees acknowledged that this “may seem a curious development,” which is an understatement. ShapeShift allows users to make fast, market-rate swaps between cryptocurrencies, for instance trading Ethereum for Zcash. But its primary appeal has been its near-total anonymity. Users can send the coins they’re selling to ShapeShift, enter a destination address to receive the coins they’re buying, and the service will execute a trade without needing to know the identity of the user. That key feature will disappear within one or two months, according to followup statements from Voorhees.

Response to the news across social media has been disappointed and angry, with much of the anger directed at Voorhees personally. That’s because there’s much more than a curtailed service at stake here. Voorhees built ShapeShift in line with his libertarian views, including the belief that the government has no right to scrutinize private financial activities. Those views were what drew Voorhees to cryptocurrency in the first place, long before there even was such a thing as a “blockchain industry”—and some see the ShapeShift announcement as a betrayal of principle.

I’ve talked to Voorhees several times about his libertarian awakening. Much like Satoshi Nakamoto, Voorhees first grew skeptical of government monetary controls in the wake of the 2008 crisis. As recounted in my BREAKER colleague Brian Patrick Eha’s history How Money Got Free, Voorhees first learned about bitcoin while involved in the Free State Project, an attempt to turn New Hampshire into a libertarian stronghold. In 2012, Voorhees published a detailed essay explaining bitcoin’s potential to protect financial privacy and weaken the government monopoly over money more generally.

Voorhees wasn’t the first to articulate those ideas, but he has committed his life to making the theory a reality. He joined Roger Ver and Charlie Shrem to help build BitInstant, one of the first bitcoin exchanges, then moved on to spearhead projects like SatoshiDice and Coinapult before starting ShapeShift in 2013. His melding of high principle and hands-on entrepreneurship has made Voorhees a hero to many. But now this libertarian privacy champion—who himself founded ShapeShift under the pseudonym Beorn Gonthier—wants to know your name.

A few knee-jerk Twitter reactions condemned Voorhees as a sellout or worse. But canny observers were quick to argue there was no way such an unbending ideologue would compromise his customers’ anonymity willingly. Crypto engineer Peter Todd immediately pegged the announcement as a “warrant canary,” a signal that ShapeShift was being served secret search warrants. Things might not be that dire, but Voorhees told BREAKER the change was “due to our need to navigate the current regulatory environment.” On Twitter, he was more blunt, saying mandatory membership was “not something we want to do, nor something any user wants. It’s a heavy decision done to de-risk under duress.”

In other words, ShapeShift is facing serious pressure to impose standard legal measures against financial crimes – though it’s unclear whether that pressure is direct and specific. Voorhees is intimately familiar with the risks of failing to play ball: his former colleague Shrem famously served a stint in federal prison over abuses at BitInstant, and Voorhees himself paid a large settlement to the SEC over alleged improper fundraising.

ShapeShift was probably only able to delay implementing so-called “know your customer” (KYC) rules for so long because it doesn’t handle any government currency. But ironically, the growth in cryptocurrency services that Voorhees himself helped spark has made ShapeShift a target for illicit activity. Drug dealers (or worse, ICO exit scammers) could easily use it to swap bitcoin for Ethereum or Zcash, then do whatever they liked with the new, thoroughly anonymized coins.

Despite the reality of regulatory pressure, some prominent figures have been harshly critical of Voorhees’ decision. Ricardo Spagni, lead administrator of the Monero privacy coin and head of the privacy-oriented payments service GloBee, opined that he would “rather shut [GloBee] down, & find something new to build with our amazing team, than capitulate & add a ‘membership program.’” Voorhees could probably afford to do just that—he sold Satoshi Dice in 2013 for a pile of bitcoin now worth more than $814 million.

But Voorhees is defending the decision as part of a long-term strategy that’s more beneficial to ShapeShift users, and the cryptocurrency ecosystem, than simply shutting down. “We are here for the long term, to win a war,” he told BREAKER, “and many battles will be lost and won along the way.”

ShapeShift still has a valuable role to play. Most notably, it’s a non-custodial service—that is, unlike most exchanges, it doesn’t hold a customer’s cryptocurrency. That’s a major point, given the unceasing barrage of hacks and failures putting funds at risk at custodial exchanges. Further, Voorhees argues that, even with identity controls in place, ShapeShift will support the broader erosion of government financial controls. “The open-source community and decentralized finance is unstoppable,” he told me, “and we want to ensure we aren’t ground up in the gears during this evolution.” He’s referring in part to the ongoing push for decentralized exchanges, BitTorrent-esque crypto-trading platforms that will leave regulators with no one to lean on.

The biggest question now may be whether ShapeShift can thrive once its customers have to prove their identities. As crypto-lawyer Preston Byrne pointed out, ShapeShift will retain a huge reputational advantage compared to services that don’t require identification. Many of those have anonymous operators, increasing the risk of fraud. And decentralized services are likely to remain slow and inconvenient for some time. The deciding factor, then, may be just how many current ShapeShift customers are actually engaged in activities they want to hide from governments. For those who aren’t, the risk and hassle of the alternatives may outweigh ideological concerns, giving ShapeShift the edge it needs to keep fighting the long war.