Grayscale files application with SEC to launch first ETF on Zcash

Grayscale Investments has taken an important step towards bringing to market the first US ETF linked to a privacy-focused cryptocurrency. The digital asset manager has filed a Form S-3 with the Securities and Exchange Commission (SEC), seeking approval to convert its historic Zcash Trust into a spot ETF listed on NYSE Arca.

If approved, the new product, tentatively called the Grayscale Zcash Trust ETF (ZCSH), would become the first regulated investment vehicle to offer direct exposure to Zcash (ZEC), a cryptocurrency known for its optional privacy features.

The move comes as institutional interest in alternative crypto assets continues to grow, following recent listings of spot ETFs on Bitcoin, Ether, Dogecoin and XRP by Grayscale and other issuers.

A goal for privacy coins

Zcash, created in 2016 by a team of cryptographers and engineers, started out as an alternative version of Bitcoin with one key difference: users can choose to protect the details of their transactions.

Privacy-coins are based on zk-SNARKs, a form of zero-knowledge proof that allows transactions to be verified without revealing the sender, recipient or amount. This technology has attracted new attention as the issue of privacy returns to centre stage in the crypto sector.

According to Grayscale, the trust currently holds around 2.4 per cent of all circulating ZEC supply, representing one of the largest institutional pools of the asset.

The company claims that with privacy set to become "fundamental to the entire crypto industry", Zcash could emerge as a strategic component in diversified digital wallets.

The market reacts as Zcash's rally continues

The filing comes at a time of strong upside for Zcash. Data from analytical platforms show that ZEC is up more than 50 per cent in the past month and more than 1,000 per cent in the past year, driven by renewed investor interest and an increase in screened transactions.

The latest rally has brought ZEC back into the spotlight of both retail traders and institutions looking for alternatives to Bitcoin.

Grayscale's move follows a series of expansions in the ETF market. The firm launched the first ETF spot on Dogecoin this week, while competitors such as BlackRock and Bitwise have expanded their product lines to meet the growing demand for regulated crypto exposure.

Institutional interest on the rise

The push on ETFs is not the only sign of growing institutional attention. Earlier this month, Leap Therapeutics announced it will use part of a $50 million investment it received from Winklevoss Capital to buy ZECs to hold in treasury, an unusual choice for a company so visible to the public.

Some analysts believe that the focus on Zcash's privacy may attract investors looking for features that Bitcoin does not offer. Others are more cautious, pointing out that privacy-oriented cryptocurrencies often face regulatory hurdles.

The SEC will now review the application to assess whether the proposed ETF meets listing requirements. Should it be approved, it would represent a milestone for privacy coins and could pave the way for broader institutional participation in the Zcash ecosystem.

For now, the submission of the application alone has been enough to bring ZEC back into the spotlight, putting the 2016-born privacy coin back at the centre of one of the most closely watched regulatory developments in the crypto sector.