Coinbase Drops Support for Privacy-Oriented Cryptocurrency Zcash for UK Users

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.

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.”

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.