Coinbase UK, the British-based arm of popular cryptocurrency exchange Coinbase, has announced that it would be dropping its support for ZCash.
Earlier this week, a random tweet seemed to confirm the news. The tweet showed Coinbase UK stating that ZCash will no longer be available on its platform as from 26th August, adding that asset holders could either convert their ZCash to other crypto assets or transfer the asset to another cryptocurrency wallet before the deadline date.
— Alex (@deskofwilkes) August 8, 2019
The purported release added, “If you don’t convert or send your ZCash by 26th August, we’ll automatically liquidate your ZEC balance into your GBP wallet, automatically bringing your ZEC balance to £0.00, before removing your ZEC wallet from your Coinbase account. We’ll give you reminders in advance, so this doesn’t come as a surprise.”
It is worth noting that ZCash is actually still useable within the United Kingdom. The Electric Coin Company, the developers behind ZCash, confirmed via a tweet that Coinbase had delisted the asset from its UK platform. However, the company pointed out that this issue was only exclusive to Coinbase, and it didn’t affect the usability or availability of the asset in the country.
The tweet stated, “To pre-empt speculation, we confirm that Zcash is 100% compatible with UK regulations & KYC/AML requirements,” adding that other crypto exchanges in the UK still listed the asset. However, given the fact that ZCash is still available to Coinbase customers within the United States and other countries in the European Union, it calls to question why customers in the UK has been limited.
Earlier this morning, Alistair Milne, a popular Bitcoin entrepreneur in the UK, tweeted his opinion that the delisting action could have been due to a precondition for the exchange to get access to the faster payments system in the UK.
The move could also have been done in a bid to stay in the good books of British regulators. Last week, industry news outlet CoinDesk reported that Her Majesty’s Revenue & Customs (HMRC), Britain’s tax regulator, started to send out letters to crypto exchanges (including eToro, CEX.io and yes, Coinbase) to reveal their transaction data and customer lists, in a bid to clamp down on tax evasion.
The only problem, as stated earlier, is that ZCash’s selling point is its focus on privacy. People buy cryptocurrency for various reasons, and in an age were user anonymity is a big desire amongst tech enthusiasts, the asset has found much success by shielding transactions from outsiders.
ZCash shields the details of its users’ transactions with zk-SNARKs, a specific form of zero-knowledge proof infrastructure. Given that Coinbase won’t be able to access the details of these transactions, it probably chose to do away with the asset for good so that it can comply with the HRMC’s request.
Back in November 2018, when Coinbase Pro announced support for ZCash, the exchange stated that it would only support withdrawals to transparent addresses, while deposits on both shielded and open addresses would be allowed.
At the time, the press release added, “In the future, we’ll explore support for withdrawals to shielded addresses in locations where it complies with local laws.” It seems that a particular case of local law compliance has arrived, and Coinbase seems to be keeping its word.