The UK branch of digital asset exchange Coinbase might soon be delisting privacy-oriented cryptocurrency Zcash (ZEC).
The exchange’s UK-based customers said that Coinbase is sending warning letters that instruct them to convert their ZEC holding to other assets, or make a transfer to an external wallet by August 26, 2019.
Coinbase’s management has not yet provided a specific reason for dropping support for Zcash, however it noted that all ZEC balances in users’ accounts will be converted to British pounds by August 26.
According to the Electric Coin Company (ECC), the firm behind Zcash’s ongoing development:
UK’s financial regulator, the Financial Conduct Authority (FCA), released a statement last month, noting that certain digital assets could fall under its regulatory remit. It seems that the FCA might need to clarify its stance regarding Zcash transactions. However, the financial regulator may not need to issue new guidelines regarding “exchange tokens” like Bitcoin (BTC) and Ether (ETH).
Coinbase Pro Only Supported Withdrawals to Transparent ZEC Addresses
HM Revenues & Customs, UK’s tax collection agency, has sent letters asking digital currency exchanges to provide clients’ names and transaction logs, in order to determine how much in taxes people might owe. Trading platforms that have received notices from HM Revenues & Customs include eToro, CEX.io, and Coinbase.
Notably, Zcash doesn’t use default privacy, but it gives users the option to hide, or shield, certain transaction details by using zero-knowledge proofs (zk-SNARKs). Shielded ZEC transactions do not disclose the amount of funds being transferred.
Coinbase Pro, a platform for professional crypto traders, announced support for Zcash transactions back in November 2018. At that time, the exchange noted:
“[We will] support deposits from both transparent and shielded [Zcash] addresses, but only support withdrawals to transparent addresses. In the future, we’ll explore support for withdrawals to shielded addresses in locations where it complies with local laws.”
Friendly Zcash Fork, Ycash Launched Last Month
Last month, Zcash’s developers announced a “friendly fork” of the privacy-focused cryptocurrency, called Ycash. The fork was created to prevent future community decisions that might lead to an extension of the “Founder’s Reward”, which gives a 10% cut out of ZEC mining rewards to early Zcash backers such as Naval Ravikant, Erik Voorhees, and the crypto’s founder Zooko Wilcox.
Howard Loo, a Zcash backer who helped launch the fork, said:
“We are … launching Ycash to uphold a promise – that the Zcash Founders Reward would be forever capped at 2.1 million coins – that we fear will come under increasing pressure between now and the expiration of the Founders Reward in October 2020.”