In an unplanned and sudden announcement, crypto exchange Coinbase said that it is delisting the privacy-based cryptocurrency ZCash from its platform for all the U.K customers. In an email sent to the users last Friday, Coinbase said that users wouldn’t be able to hold any ZCash balance from August 26 onwards.
@zcash @ElectricCoinCo @coinbase what's going on with Zcash in the UK? pic.twitter.com/6GWS9CuIoH — Alex (@deskofwilkes) August 8, 2019
The decision from Coinbase arrived soon after the British tax authority HM Revenue & Customs requested the exchange to provide the user transaction data. Citing an industry insider, CoinDesk reported:
“HMRC is looking to work with exchanges when it comes to finding information on people who have been buying and selling crypto. I think they will only go back a couple of years, two or three years”.
Upon reaching out to the HMRC, the agency said that it has confirmed that such decisions are authorized within its purview and ambit. The agency said:
“These exchanges can retain information on their clients and the transactions that they have completed. These transactions may result in potential tax charges and HMRC has the power to issue notices requiring exchanges to provide this information.”
Coinbase has asked its users to either convert their existing ZEC balances to other cryptocurrencies or withdraw them, before the given deadline. After August 26, Coinbase will automatically convert the ZEC balances into GBP.
However, ZCash’s parent company Electric Coin Company has issued a statement that except for Coinbase, no other exchanges have been affected. As a result, U.K. residents can still trade the privacy-centric cryptocurrency through the crypto exchange CEX.IO. Furthermore, it added that ZCash is completely compatible with the U.K. regulations.
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
The Electric Coin Company said that they are not sure of the reason behind Coinbase’ delisting of ZCash. However, in the past, Coinbase has hinted several times that there might be other regulatory hurdles behind Coinbase’s decision to delist the privacy-centric cryptocurrency.
When Coinbase first decided to list ZCash in December 2018, it didn’t add the support for New York and New York jurisdictions owing to the regions’ strict regulatory framework.
Besides, the government agencies have been having a strict vigilance on privacy-centric cryptocurrencies due to their non-transparent nature of trading. Several regulators believe that such cryptocurrencies have been the root cause of laundering money across the globe.
However, some privacy-based cryptocurrencies like ZCash already have the provision to use either of the shielded or the transparent addresses. Thus, the cryptocurrency can work across all jurisdictions.