San Francisco-based cryptocurrency exchange Coinbase has announced it’s dropping support for the privacy-oriented cryptocurrency Zcash (ZEC) for its U.K. customers later this month.
According to an email circulating on social media, from August 26 onwards Coinbase’s users in the United Kingdom will “no longer be able to hold a Zcash balance.” This means they’ll have to either withdraw their ZEC tokens, or convert them to fiat or another cryptocurrency.
The email notes that if they don’t opt for either option and try to maintain ZEC on the platform, Coinbase will automatically liquidate their Zcash balances and deposit GBP into their wallets.
@zcash @ElectricCoinCo @coinbase what's going on with Zcash in the UK? pic.twitter.com/6GWS9CuIoH
— Alex (@deskofwilkes) August 8, 2019
In the email, the cryptocurrency exchange didn’t specify the reason behind the move. Its customers outside the U.K. will reportedly be unaffected by the change. The company behind Zcash, Electric Coin Company, tweeted out the country’s residents may still buy and sell ZEC using CEX.IO.
It add that to “pre-empt speculation” it “can confirm that Zcash is 100% compatible with UK regulations & KYC/AML requirements.”
Those affected by @coinbase UK issues: this is limited to Coinbase UK only. UK residents can still buy/sell Zcash through @cex_io. No other exchanges in the UK affected. To pre-empt speculation, we confirm that Zcash is 100% compatible with UK regulations & KYC/AML requirements.
— Electric Coin Company (@ElectricCoinCo) August 9, 2019
As recently covered the U.K.’s financial watchdog, the Financial Conduct Authority, has said some cryptocurrencies fall under its regulatory remit, although “exchange tokens” don’t. Moreover Britain’s tax regulator, HM Revenue & Customs (HMRC) has been pressuring exchanges to reveal the identities and transaction histories of customers.
Zcash uses type of zero-knowledge proof technology called zk-SNARKs, which only allow those who check the blockchain to know a transaction happened, without knowing who sent it or received it.
When Coinbase Pro initially added support for Zcash in November of 2018, it noted that it would support deposits from transparent and shielded addresses, although it would only support withdrawals to transparent addresses – those that allow users to check who sent and received a transaction.