Horizen Protocol Confirms ZEN to Lose Privacy Coin Status
Privacy coins have been facing intense regulatory crackdowns in recent months. The latest one to back-pedal on its core functionality is the privacy-focused network ‘Horizen,’ which announced that all privacy features will be removed at the consensus level following the approval of ZenIP 42204.
As per the protocol’s statement, the deprecation of the Horizen mainchain shielded pools will be implemented as part of the upcoming mandatory software upgrade. The target release windows for testnet and mainnet are scheduled for August and September 2023, respectively.
Preventing Shielded Transaction Support at Consensus Level
In an official blog post, Horizen stated that the community approved ZenIP 42204 for the “deprecation” of the protocol’s mainchain shielded pools, which calls for the removal of shielded transactions with transparent inputs from the mainchain.
Following the deprecation of mainchain shielded pools, all privacy features will be eliminated from Horizen’s main blockchain at the consensus level which means that its native token ZEN will no longer be a privacy coin.
Horizen cited global regulatory threats as well as other technical debts as the reason for the move.
“The purpose of the deprecation is to ensure Horizen does privacy technology the right and sustainable way to drive ecosystem growth and minimize risks. It proposes a solution to eliminate technical debt and avoid regulatory threats that can prevent the greater Horizen community from fully and freely participating in our ecosystem.”
Regulatory Crackdown Against Privacy Coins
Regulators across different jurisdictions have taken steps to prohibit privacy-enhancing crypto in some form or another. Earlier this year, Dubai’s Virtual Assets Regulatory Authority (VARA) banned all activities associated with privacy coins such as Monero (XMR) and Zcash (ZEC) in a bid to prevent illicit activities.
Crypto giant, Binance, which has been facing significant regulatory scrutiny in the United States as well as other key jurisdictions, had previously announced plans to delist privacy coins for users in France, Italy, Spain, and Poland, rendering them unable to buy or sell at least 12 tokens. The decision was, however, reversed after revising operations to comply with local European regulations.
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