ETF: Grayscale Prepares a Revolution with Zcash
Zcash enters the ETF arena. Grayscale strikes hard by launching the first fund based on a privacy coin in the United States. A bold bet, between technological innovation and regulatory pressure. All the details below !
In brief
- Grayscale wants to launch the first American ETF based on Zcash, a cryptocurrency focused on privacy.
- This Zcash ETF project raises major regulatory issues related to transaction anonymity.
Grayscale Targets an Unprecedented ETF with Zcash
Grayscale submitted a Form S-3 to the SEC on November 26. The goal: to convert its Zcash Trust into a spot ETF. This strategy would allow listing the fund on the NYSE Arca, following the CoinDesk Zcash Price Index. If the project succeeds, it will be the first American ETF linked to a cryptocurrency focused on privacy.
This new product is part of the continuity of Grayscale’s previous ETFs already approved for:
- Bitcoin ;
- Ethereum ;
- Dogecoin ;
- XRP.
The current trust holds about 150 million dollars in ZEC. These assets would therefore migrate into the new structure if the SEC gives the green light.
Is the Crypto ETF Market Finally Opening Up to Privacy?
The ZEC token price has exploded by over 1,000% year-on-year, reaching $735. This increase is accompanied by renewed institutional interest, strengthened by the announcement from the Reliance Group. The latter has moved its entire crypto portfolio to Zcash.
The Zcash ETF would therefore operate according to the classic model: creation and redemption of shares in kind using baskets of ZEC. Grayscale plans annual fees of 2.5%. These are higher than those of Bitcoin ETFs but consistent with the product’s complexity.
Zcash Now Faces the ETF Regulatory Test
Zcash uses zero-knowledge proof technology that masks transaction data. This mechanism, although innovative, raises regulatory questions. Grayscale indeed acknowledges that this privacy could complicate compliance with KYC and AML standards.
The company is thus betting on the simplified S-3 procedure , possible thanks to its past experience and size. However, the SEC could require additional guarantees, given ZEC’s anonymous nature.
In any case, approval of an ETF backed by Zcash would mark a turning point. It would test the limits of integrating privacy-focused crypto-assets into regulated finance. If Grayscale succeeds in this bet, similar projects could quickly follow.
