Key Takeaways
Grayscale Investments filed to convert its Zcash Trust into a spot ETF, a move that would create the first U.S. exchange-traded fund for a privacy coin and follows a recent 400% surge in the asset's price.
"Rising concerns around financial surveillance and regulatory monitoring could drive long-term demand for privacy-focused blockchain systems," Tushar Jain, co-founder at Multicoin Capital, said earlier this year after the crypto hedge fund disclosed a significant Zcash position.
The filing comes as Zcash’s shielded supply—transactions with enhanced privacy—reportedly grew from 8 percent to 23 percent of the total in early 2026. The asset saw a price surge of over 400 percent in late 2025 before a recent 50 percent correction from its peak. Approximately 30 percent of Zcash's circulating supply is held in shielded addresses, according to a FinanceFeeds report.
If approved by the Securities and Exchange Commission, the proposed Grayscale Zcash Trust ETF (ZCSH) would provide a regulated investment vehicle for Zcash. The approval could legitimize the entire privacy coin sector and establish an important precedent for other privacy-oriented assets within regulated U.S. financial markets.
The move represents a significant development for the privacy coin sector, which has historically faced regulatory scrutiny and exchange delistings due to concerns around anonymous transactions. Grayscale’s proposed conversion follows the firm’s established strategy of transforming its closed-end crypto trusts into more accessible exchange-traded products, having previously converted funds tied to Bitcoin and Ethereum.
A key factor supporting the filing is the recent conclusion of a long-running SEC review into privacy-focused digital assets, which reportedly ended without pursuing enforcement action against Zcash-related entities. Market participants interpreted this as a reduction in the legal uncertainty surrounding compliant privacy coin infrastructure in the United States.
Zcash has seen renewed institutional attention in recent months, with crypto hedge fund Multicoin Capital disclosing it had accumulated a significant position beginning in February. The firm cited privacy-preserving financial infrastructure as an increasingly important component of digital asset markets.
An ETF structure would allow institutional allocators to gain exposure to Zcash without facing the complexities of direct token custody or relying on offshore trading venues. However, the path to approval is not guaranteed. Industry observers note that privacy coin ETFs could face additional scrutiny compared with Bitcoin or Ethereum products. The fact that about 30 percent of Zcash’s supply is held in shielded addresses complicates institutional auditing and custody frameworks, a likely point of focus for regulators.
This article is for informational purposes only and does not constitute investment advice.
