Grayscale Investments has submitted an application to introduce the first U.S.-listed exchange-traded fund (ETF) centered on
Zcash
(ZEC), a cryptocurrency known for its privacy features that has
climbed nearly 1,000%
in value over the last year. Detailed in a Securities and Exchange Commission (SEC) S-3 registration, this initiative represents Grayscale's ongoing effort to transform its private trusts into publicly traded products,
following similar moves
for
Bitcoin
and
Dogecoin
. Zcash's dramatic price increase has fueled discussion in the crypto sector, with some experts cautioning it might "divide support" from Bitcoin, while others believe it serves as a useful tool for confidential transactions
according to analysts
.
The ETF proposal highlights Zcash's rising acceptance in mainstream finance, especially as interest in zero-knowledge encryption grows. In its submission, Grayscale pointed out that Zcash stands apart from Bitcoin by providing "optional privacy-enhancing capabilities," allowing users to conceal transaction information through zero-knowledge proofs
as noted in filings
. This has attracted the attention of investors and tech leaders, including the Winklevoss twins, who recently established Cypherpunk Tech, a treasury company focused on Zcash. They referred to Zcash as "encrypted Bitcoin," suggesting it complements Bitcoin's value storage function while excelling in private payments
according to their analysis
.
Nonetheless, Zcash's rapid ascent has also sparked some worries. Bloomberg ETF analyst Eric Balchunas compared Zcash to a "third-party candidate" in a market dominated by Bitcoin,
warning it could fragment support
. Detractors have accused Zcash supporters of artificially generating excitement, pointing to marketing efforts and misleading headlines that claimed Fidelity analysts predicted ZEC would reach $100,000
according to reports
. Meanwhile, industry voices such as Arman Meguerian and Samson Mow have dismissed the idea that Bitcoin loyalists are moving to Zcash, calling it more of a joke than a real competitor
as industry figures state
.
Grayscale's Zcash ETF fits into its broader push into tokenized finance, where it has also positioned
Chainlink
(LINK) as a "vital bridge" connecting digital assets to traditional financial systems
according to analysis
. The company believes that turning real-world assets into blockchain tokens will drive future growth, with Chainlink's technology enabling cross-chain transactions and regulatory compliance
as noted in reports
. This approach highlights Grayscale's emphasis on infrastructure tokens over layer-1 blockchains, a trend seen in its expanding ETF lineup for Dogecoin,
XRP
, and now Zcash
according to filings
.
The possible approval of the Zcash ETF comes at a time when the broader crypto market is experiencing a downturn,
with Bitcoin and ether down 8% and 13% year-to-date
. Although spot ETFs do not ensure price increases, they could make it easier for both institutional and individual investors to access these assets. Trading in Zcash and XRP derivatives
spiked before recent ETF launches
, indicating anticipation in the market. Still, uncertainty about demand remains, with early trading activity and inflows likely to determine the ETF's performance.
As the SEC evaluates Grayscale's proposal, debate around Zcash continues. Supporters highlight its importance for privacy in a world of increasing surveillance and AI-powered data analysis
according to reports
. Critics, on the other hand, warn of speculative excess,
especially after Zcash's recent 1,200% jump
on platforms like OKX. The resolution of this debate—and the ETF's outcome—could influence the trajectory of privacy coins as regulations evolve.
