On May 14, 2018, the New York State Department of Financial Services (DFS) announced that it "authorized" Gemini Trust Company LLC, to "offer the custody services and trading of Zcash, Litecoin, and Bitcoin Cash." While DFS permitted Gemini to launch Zcash (ZEC) trading immediately, the Litecoin (LTC) and Bitcoin Cash (BCH) approvals are for "potential future offerings."
When Does Zcash Actually Start Trading?
According to Gemini's blog, customers will be able to deposit ZEC holdings from shielded or unshielded addresses into the exchange starting on Saturday, May 19, at 9:30 a.m. ET. Gemini's ZEC trading services will begin exactly three days later, on Tuesday, May 22. Initially, the exchange will "only support withdrawals to unshielded addresses," but the company is "working to support withdrawals to shielded addresses in the future."
What Sort of Trading Support Will Gemini Offer?
The exchange plans to support continuous trading between the ZEC/USD, ZEC/BTC, and ZEC/ETH trading pairs (this is the 24/7 order book trading familiar to most cryptocurrency users). Gemini also plans to support block trading across the same three trading pairs.
Note: Readers may remember that the exchange introduced its block trading service just last month. The platform connects buyers and sellers of large quantities of digital assets.
As the exchange does with its bitcoin (BTC) and Ether (ETH) auctions, Gemini will only support the USD trading pair for its 4:00 p.m. ET daily ZEC auction. The exchange has supported daily bitcoin auctions since September 2016 and daily Ether auctions since July 2017.
Did Anybody Leak Information About Gemini's Zcash Support?
It doesn't look like it.
Just minutes after the DFS and Gemini announcements, the price of Zcash jumped from about $250 per coin to more than $300 per coin. However, the price spike occurred after Gemini posted its announcement, so it appears that the exchange managed the keep the news top-secret and negate any trading based on insider information.
On Twitter, Zcash founder and CEO Zooko Wilcox commented on the integrity of his team.
Gemini and Zcash's careful handling of the ZEC announcement is markedly different from the PR nightmare Coinbase faced when it announced support for BCH. In that case, the BCH price substantially increased on other exchanges prior to Coinbase's announcement, which led to justifiable concerns that exchange employees were privy to and traded based on information regarding the BCH announcement. The team at Coinbase decided to conduct an "investigation into the matter," and in March, a related class action lawsuit was filed.
What Do I Need to Know About Zcash?
The digital asset known as Zcash provides a much greater degree of privacy than bitcoin.
Bitcoin is pseudonymous (making it difficult, but not impossible to trace). Every transaction on the bitcoin blockchain is visible and broadcasted to the network. By comparison, Zcash gives users the choice between transparency and secrecy. This is explained by the project's FAQ page:
"Zcash is built upon and extends the Bitcoin protocol. Addresses which start with 't' behave exactly like Bitcoin, including their globally public properties and we refer to these as 'transparent addresses'. Addresses which start with 'z' include the privacy enhancements provided by zero-knowledge proofs (see FAQ: what is a zero-knowledge proof?) and we refer to these as 'shielded addresses'. It is possible to send ZEC between these two address types."
"Zcash picks up where Bitcoin left off," said Gemini CEO Tyler Winklevoss in an announcement posted on the Zcash Blog. "Bitcoin has many strengths, but privacy is not one of them."
Cameron Winklevoss, Tyler's brother and Gemini president, added, "Bitcoin and Zcash are two revolutionary technologies vying for different mantles, Bitcoin being digital gold and Zcash being digital cash."
Questions of Regulation
Cameron also remarked on the regulatory approach to Zcash. "Part of the reason a coin like Zcash has a smaller market cap is because people are not sure if regulators will ever get comfortable with this type of technology," he told Bloomberg. "Today demonstrates that through education and collaboration and with the right controls in place, regulators can get comfortable with privacy technology."
Indeed, even after today's price jump, the market cap of Zcash is just north of $1.3 billion, according to CoinMarketCap. At present, there are approximately 3.9 million ZEC in circulation, per ZCHAIN.
Candidate for New York Attorney General Manny Alicandro seemed pleased by Gemini's move, calling it a "good thing because it opens the broader market." He added, "With this as the framework, I would hope that the DFS works with the New York State legislature to modify and improve the current BitLicense requirements with a view towards Wyoming's effective efforts."
In February, the DFS issued guidance to remind cryptocurrency exchanges of their responsibilities to monitor for fraudulent activity and market manipulation, and to report any findings in a timely fashion.