RFC - Exploring Centralised Stablecoins w/ ZSAs


  • Membrane Finance is interested in exploring centralised stablecoins on Zcash using ZSA technology.
  • Challenges include regulatory compliance and decentralisation concerns.
  • The Zcash community is invited to provide feedback to shape the future of stablecoins on Zcash.

Hello Zcash Community,

This is Juuso, a stablecoin enthusiast and researcher at Membrane Finance. I am reaching out to you today to initiate a conversation on an exciting new topic that has been brewing in our research circles: the possibility of issuing centralised stablecoins on Zcash. We believe this could be an innovative step for finding more uses of the Zcash blockchain, and we are eager to hear your thoughts, ideas, and feedback.

We understand that the Zcash blockchain is unique with its robust privacy features and that the recent steps towards implementing “ZSA” (Zcash Shielded Assets) technology present an incredible opportunity to further explore the boundaries of what we can achieve. As discussed in previous forum posts, ZSAs could pave the way for a new breed of privacy-focused stablecoins that bridges the gap between fiat- and cryptocurrencies while preserving the principle of censorship resistance.

Our plan is to research how we might leverage this technology to issue centralised stablecoins on Zcash, but we need your insights to help shape the course of our project.


The stablecoin conversation has been ongoing for some time now, and we believe that Zcash has a significant role to play. Stablecoins, particularly centralised, fiat-backed ones, have been the catalyst for significant growth in the crypto asset sphere. However, these stablecoins, while critical for bridging the gap between fiat and crypto, are also completely without privacy.

In a world where privacy and financial freedom are becoming increasingly important, we believe there is a compelling case for creating a censorship-resistant, fiat-linked stablecoin on Zcash. By utilising the Zcash blockchain and USDC, for example, we could create a stablecoin that maintains a tether to fiat while also benefiting from the privacy features of Zcash.

The question at hand is, how can we build an interface between the Zcash blockchain and USDC or any other stablecoin? This is a conversation that we believe is essential for the growth and evolution of Zcash, and we are eager to hear your thoughts on it.

This idea is not without its challenges. In past discussions with potential ZSA issuers such as Tether, USDC, Maker, the ECC encountered varying responses, ranging from some interest to no response or outright rejection. Regulatory hurdles were a significant concern for many, with requirements for fund freezing, address blocklisting, and regulatory risk being perceived as too difficult for them to even look into the matter further.

But we believe there might be a way forward. We believe that the comments above purely reflect the ideas of three already established stablecoins and are not to be taken as discouragement for further research. We at Membrane Finance, a MiCA-regulated and EU-based stablecoin issuer, are considering innovative solutions to address these challenges. For example, we are looking at the potential for designing ZSAs with programmability in mind, allowing issuers to implement a set of rules that could meet regulatory requirements. This would, of course, need to be done in collaboration with the QEDIT team.

Discussion with the Zcash community

However, it’s crucial that we address potential risks and concerns about decentralisation and Zcash’s ethos. We want to hear your thoughts on this. Are there risks we need to mitigate? How might we uphold the values of decentralisation while pursuing this direction? What are your concerns, and how might we address them?

We’re not only looking at this from a technical perspective but also considering its potential impact. This initiative could create additional value for Zcash holders and position Zcash at the forefront of the privacy-centric stablecoin conversation.

We eagerly await your thoughts, suggestions, and concerns. Your input can help shape the future of stablecoins and ensure Zcash remains a key player in this evolving landscape.




Is it possible to mint algorithmic stablecoins on Zcash such as DAI and LUSD?
So far I found LUSD the better approach as it’s using single collateral(Ethereum).
So no centralized stablecoins(USDT/USDC) are involved.

So far the closest implementation of confidential algorithmic stablecoin I found is NephriteMoney.
But it is rather new and minted on a smaller and less-known L1 chain.

With the recent government enforcement on Crypto, I’m really interested in how stablecoin ecosystem could evolve.

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In the EU MiCA makes the regulations particularly onerous for algorithmic stablecoins.

On the other hand at least there is now a clear framework to work within…


This is really cool but what programmability would be required to meet regulatory requirements? I’ve personally been thinking about how the Zcash memo field (which is also available for ZSAs) can be used for sending claims and attestations along with a transaction. It might be that in some situations ZSAs require these memo fields to contain certainly claims and have different privacy requirements then a normal transaction (which might require a protocol change).

There is some really interesting work been done by the ZKPass team in this space which may (or may not) be something we can pack into the Zcash memo field. Things like KYC and proof of citizenship. @roinevirta what are your thoughts of using the Zcash memo field to solve some of these problems?


From what I have understood, the basic needs of a centralized stablecoin that we might want to start from are two things:

  1. Global Viewing Keys - Assign a central authority to be able to identify addresses that own the Stablecoin ZSA

  2. Global Freezing Keys - Assign a central authority to be able to freeze addresses that own the Stablecoin ZSA

I am sure there is a bunch more nuance here than what I know about, and thus would love to see this matter researched further. Otherwise we are taking a risk of again falling behind. Stablecoins happened on Bitcoin already long ago - we need to catch up.

Maybe a research grant could be explored to find out:

  1. What are the requirements of different stablecoins - Compare different jurisdictions to see where it might make sense to start. Maybe US-based stablecoins are the hardest to work with and thus we should look elsewhere?

  2. Research ways of fulfilling these requirements to some degree, without compromizing the core tenets of Zcash - This would require comments from the Zcash community as well as Zcash Foundation to understand what are things that should NEVER be changed in Zcash, and then figuring out intelligent ways of compromise with the results from 1.

Would anyways love to see ZF people note this, especially at seems like a recent thing on their minds based on this comment by @joshs.


hello @roinevirta ,
difficult to tell how happy I am to see that a company specialized in stablecoin infrastructures is interested in developing ZSAs on Zcash.

As I started the previous conversation on the matter I am very supportive of this idea, including programmability to satisfy the involved stakeholders (e.g. Circle). Anyhow this discussion requires the participation of Qedit ( @vivek ?), hope they will jump as soon as possible in the discussion.

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