Crypto: Zcash and Monero soared in August thanks to two major developments

Privacy-focused cryptos significantly outperformed the market in August. Zcash (ZEC) climbs 82%, driven by the launch of Grayscale’s ZCSH spot ETF on NYSE Arca. Monero (XMR), for its part, takes 40%, thanks to the arrival of native swaps on THORChain v3.20. And the dynamic does not stop there: several more discreet privacy coins are also benefiting, even if regulatory pressure does not weaken.

Zcash, Grayscale’s boost

The ZEC surge reached its peak during the last week of August, but the movement was underway well before the ETF’s listing. The return of the token to its 2018 levels had laid the foundations.

Then, on August 25, Grayscale completed the conversion: ZCSH thus became the very first listed product to offer direct exposure to the ZEC. The fund draws on approximately $304 million in ZEC held at Coinbase Custody, charging an annual fee of 2.5%.

Grayscale presents ZCSH as a “satellite” position. The fund justifies the conversion by the maturity of the network and its zero-knowledge proofs (cryptographic proofs which validate a transaction without revealing amounts or addresses).

Buying a share of ZCSH rather than holding ZEC means benefiting from the creation and redemption mechanism specific to ETFs, which reduces the differences with the net asset value of the fund, where the trust was still trading at a 17% discount at the end of June. The effective launch of ZCSH on NYSE Arca remains a world first for a spot exhibition at a privacy corner.

Monero and THORChain, the bet of native swaps

Monero has followed a different trajectory. XMR started the month more calmly before accelerating as the end of August approached. Over the last week, the crypto has gained almost 20%, bringing its monthly growth to around 40% and its capitalization to almost 10 billion dollars.

This time, it was not an ETF that served as the catalyst. The main new element concerns THORChain, which integrated native XMR swaps in its version 3.20. The development allows users to exchange Monero for other assets like bitcoin or ether directly through the protocol’s cross-chain infrastructure.

For Monero, this integration arrives in a particular context. Several exchange platforms have already removed XMR from their offering, in particular due to compliance difficulties linked to the confidential nature of transactions.

Decentralized liquidity solutions therefore take on additional importance. With native swaps, users can move their XMR without systematically going through a centralized platform or a tokenized version of the asset.

However, the deployment remains gradual and liquidity will still have to prove itself. L’soaring XMR observed in August therefore does not guarantee that this dynamic will continue at the same pace.

Liquidity vs. regulation, the sector’s dual challenge

Between institutional access for Zcash and new decentralized gateways for Monero, the market is showing renewed interest in anonymity-preserving financial tools.

However, the regulatory context continues to tighten: around ten jurisdictions already prohibit the trading of privacy coins on regulated exchanges, and the entry into force in 2026 of the OECD’s CARF (Crypto-Asset Reporting Framework) framework will reinforce tax transparency obligations.

For this summer rally to last, three factors will be determining: actual flows to the ZCSH ETF, the depth of liquidity on THORChain, and the ability of projects to reconcile confidentiality and compliance. As the progression of Zcash already showed before the Ironwood update, privacy is once again becoming a promising investment theme, it remains to be seen whether volumes will follow in the long term.