ETF: Grayscale prepares a revolution with Zcash
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Zcash enters the ETF arena. Grayscale hits hard by launching the first fund based on a privacy coin in the United States. A bold bet, between technological innovation and regulatory pressure. All the details below!

Zcash defies regulation for an ETF, alone in the center of the arena

In brief

  • Grayscale wants to launch the first US ETF based on Zcash, a privacy-focused cryptocurrency.
  • This Zcash ETF project raises major regulatory issues linked to the anonymity of transactions.

Grayscale targets a new ETF with Zcash

Grayscale submitted an S-3 form at the SEC on November 26. The objective: convert your Zcash Trust into a spot ETF. This strategy would allow the fund to be listed on the NYSE Arca, following the CoinDesk Zcash Price Index. If the project is successful, it will be the first US ETF linked to a privacy-focused cryptocurrency.

This new product is part of the continuity of previous Grayscale ETFs already approved for:

  • Bitcoin;
  • Ethereum;
  • Dogecoin;
  • XRP.

The current trust holds approximately $150 million in ZEC. These assets would therefore migrate into the new structure if the SEC gives the green light.

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Is the crypto ETF market finally opening up to privacy?

THE ZEC token price exploded more than 1,000% year-over-year, reaching $735. This increase is accompanied by a renewed institutional interest, reinforced by the announcement of the Reliance Group. The latter moved his entire crypto portfolio to Zcash.

The Zcash ETF would therefore operate according to the classic model: creation and redemption of shares in kind using ZEC baskets. Grayscale charges an annual fee of 2.5%. They are superior to those of Bitcoin ETFs, but consistent with the complexity of the product.

Zcash now facing ETF regulatory test

Zcash uses zero-knowledge proof technology which hides transaction data. This mechanism, although innovative, nevertheless raises regulatory questions. Grayscale recognizes that this confidentiality could complicate compliance with KYC and AML standards.

The company is therefore banking on there simplified S-3 procedurepossible thanks to its past experience and its size. However, the SEC could require additional safeguards, given the anonymity of ZEC.

In any case, the approval of an ETF backed by Zcash would mark a turning point. It would test the limits of the integration of confidential crypto-assets into regulated finance. If Grayscale succeeds in this bet, other similar projects could quickly follow.

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