Grayscale Investments filed with the U.S. Securities and Exchange Commission on May 8 to convert its Zcash Trust into a spot ETF. Approval would create the first U.S. exchange-traded fund directly tied to a privacy-focused cryptocurrency. The filing came after reports that the SEC had closed its review of privacy coins without taking enforcement action against Zcash-related entities.
The proposed conversion follows the structure Grayscale previously used for its Bitcoin and Ethereum investment products. Grayscale’s Zcash Trust currently holds more than $196 million in assets. That makes the filing more than a routine product update; it is another move in the firm’s effort to widen its crypto ETF lineup beyond the two largest digital assets.
ZEC jumped after the filing and briefly neared $600
Zcash reacted quickly. After the ETF filing, ZEC surged and briefly approached $600. The token had already gained more than 1,000% year to date and at one point moved into the top 15 cryptocurrencies by market capitalization. The market response showed how strongly traders are linking ETF access with broader institutional demand for privacy-focused assets.
Interest from professional investors has also been building. Multicoin Capital co-founder Tushar Jain said the hedge fund started building a large ZEC position in February. He described Zcash as a macro hedge tied to rising concern over financial surveillance and the growing importance of digital privacy infrastructure.
Privacy features create hard questions for ETF compliance
Zcash launched in 2016 through Zerocoin Electric Coin Company with privacy-oriented transaction features at its core. Market data cited in the report shows shielded transactions now make up roughly 30% of network activity. That is central to the asset’s identity. It is also the main reason regulated product design becomes more difficult.
Roughly 20% to 25% of Zcash supply is reportedly held in encrypted wallet addresses. For an ETF, that affects custody requirements, auditing standards, and proof-of-reserves reporting. Most existing crypto ETFs depend on transparent on-chain wallet systems to satisfy compliance checks, while Zcash’s privacy architecture makes those processes less straightforward.
Grayscale keeps pushing beyond Bitcoin and Ethereum
Even with those issues, market participants took the SEC’s reported decision to close its privacy-coin review without enforcement action as a sign that regulatory uncertainty around Zcash had eased. That shift in perception gave the filing extra weight.
The Zcash application is the latest in Grayscale’s broader ETF expansion effort. In recent months, the firm has also pursued filings tied to XRP, Dogecoin, Solana, Cardano, and NEAR Protocol. The move lands as U.S. asset managers compete more aggressively to launch regulated crypto investment products. If regulators sign off, the Grayscale Zcash ETF would become the first regulated spot ETF focused on a privacy coin in the U.S. market.