As the digital asset industry moves swiftly towards mainstream adoption, it appears the desperate need to appease the desires of investors trumps the traditional tenets of cryptocurrency. In the most recent example of such behavior, major cryptocurrency trading platform Coinbase has chosen to delist Zcash (ZEC) at the request of a new banking partner.
Three days ago it was revealed that the UK arm of Coinbase had chosen to remove Zcash from its list of available trading assets. An expected notice was sent out to customers and there was understandably some confusion following the announcement since no explanation was provided. Now, it seems apparent that the decision was made due to new banking partner ClearBank feeling ‘uncomfortable’ with the privacy features Zcash offers.
The new partnership with ClearBank is a strategic move by Coinbase designed to help remedy the loss of its connection to the UK’s Fast Payments Scheme (FPS). Coinbase’s connection with the FPS scheme was recently severed when major UK financial institution Barclay’s Bank canceled its relationship with Coinbase following concerns related to risk.
While ClearBank is reportedly happy to take over the reins from Barclays, its decision to do so is not without conditions. The use of zero-knowledge proofs that give Zcash its private, untraceable nature makes compliance with legal regulations a tough job for the bank. For this reason, it is alleged that ClearBank requested Coinbase cease support of the asset immediately.
A rush to appease
It is not clear the degree of debate that preempted the decision but the speed and decisiveness at which the decision was made are indicative of a changing stance from crypto exchanges. Prior to 2018, cryptocurrency exchanges were proud to operate outside of the will of traditional financial institutions but following an almost year-long bear market, it would now seem that companies will bend over backward to make a profit.
Today it might be Zcash for its libertarian, privacy-centric focus – tomorrow, who knows? The altcoin market is awash with coins that don’t conform to the needs of traditional regulation – many doing so for that very reason alone. How long before the original tenets of cryptocurrency are forgotten altogether?