Grayscale Targets First U.S. Zcash ETF as Privacy Coin Explodes 1,000% – What’s Next?

Core Viewpoint - Grayscale Investments is seeking to convert its Zcash Trust into a U.S.-listed exchange-traded fund (ETF) to capitalize on the significant rise in Zcash's value, which has surged nearly 1,000% over the past year [1][4]. Group 1: ETF Development - The filing with the Securities and Exchange Commission represents Grayscale's effort to expand its ETF offerings into the privacy-coin sector [1][2]. - If approved, this would be the first U.S. ETF providing regulated exposure to Zcash, a cryptocurrency that utilizes zero-knowledge proofs for transaction privacy [2][3]. Group 2: Market Dynamics - Zcash's unique feature is its selective privacy through shielded transactions, which has become increasingly appealing to investors concerned about the traceability of Bitcoin and other transparent blockchains [3][4]. - The Zcash market has experienced significant volatility, with its price rising from approximately $40 to over $700 in a few weeks, before fluctuating around $450 [5][6]. Group 3: Institutional Interest - A Zcash ETF would lower the management premium associated with the current trust structure and facilitate easier trading through traditional brokerage accounts [4]. - This product could provide institutional investors with a regulated entry point into the privacy-coin market, which has faced challenges in attracting mainstream capital due to compliance issues [4]. Group 4: Regulatory Concerns - Concerns have been raised regarding the storage of Zcash on centralized exchanges, as it may compromise its privacy features, turning it into a traceable asset [6][7]. - The comments from BitMEX co-founder Arthur Hayes highlight ongoing issues related to self-custody and regulatory oversight in the context of privacy coins [7].