Following the launch of Zcash (ZEC) on Coinbase Pro last week, Coinbase has announced support for the cryptocurrency on Coinbase.com and on the crypto exchange’s Android and iOS apps, enabling users to buy, sell, send, receive, or store ZEC throughout the company’s platforms and services.
At the moment, Zcash support is available to customers in most jurisdictions, with the exception of New York state and the United Kingdom. According to the announcement, other jurisdictions may later be added.
It will be recalled that following the price rise recorded after the initial Coinbase Pro integration last week, the cryptocurrency defied the so-called “Coinbase Effect” by falling 17 percent in a single day on November 30. Explaining how the privacy-focused capabilities of Zcash will be supported on Coinbase, the company revealed that it would offer partial support for shielded transactions until such a time as local regulations allow for full implementation of transaction shielding.
An excerpt from the Coinbase statement reads:
“In both cases, the unencrypted/transparent version of the protocol allows third parties to see metadata associated with the communication or transaction, while the encrypted/shielded version protects this information. Initially, customers can send ZEC to Coinbase from both transparent and shielded addresses, but only send off Coinbase to transparent addresses. In the future, we’ll explore support for sending ZEC to shielded addresses in locations where it complies with local laws.”
Following the announcement by Coinbase on Twitter, responses have veered from positive to distinctly unimpressed. Some have speculated that the development may have implications for the continued privacy of Zcash. According to this school of thought, this core feature of the cryptocurrency which is secured using zero-knowledge cryptography, might be compromised by going live on Coinbase. This is because Coinbase is based in the United States and is thus subject to state and federal laws, including supervision by the SEC and FINRA KYC/AML requirements. The deployment of KYC for the purpose of trading ZEC, in theory, would contradict the spirit of the cryptocurrency by effectively exposing the identity of every customer who trades ZEC on Coinbase.
On his part, Zcash founder Zooko Wilcox has expressed optimism about Coinbase upholding the privacy enhancements created by Zcash in spite of the many arguments to the contrary.
Speaking recently in a tweet he said:
“As the industry matures, we believe privacy protections will be mandated by most exchanges, governments and other financial institutions, leading to the broad adoption of Zcash.”
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Last modified: May 20, 2020 2:12 PM UTC