Grayscale filed an S-3 with the SEC to convert its Grayscale Zcash Trust (ZCSH) into a spot Zcash (ZEC) ETF, seeking to facilitate institutional and retail access to this privacy-focused cryptocurrency. The initiative follows an extreme ZEC surge—more than 1,000% since late September—accompanied by volatility and a recent correction.
The formal filing proposes converting the trust, which manages around $137 million in assets, into a listed spot ETF using top-tier custodians and counterparties. Coinbase Custody is listed as custodian; Coinbase as prime broker; and The Bank of New York Mellon as transfer agent and administrator, aligning infrastructure with institutional expectations while aiming to broaden access to ZEC.
Reports also indicate that Barry Silbert sold holdings of the Grayscale Zcash Trust during the rally, a move observed by the market as an indication of active institutional interest and engagement with the product amid shifting liquidity conditions.
The ZEC rally was extraordinary, with gains in excess of 1,000% between late September and early November 2025, and some estimates cite rebounds of up to 1,800% since April. That advance raised the market capitalization to approximately $10.1 billion, bringing Zcash closer to prominent positions versus established altcoins; the surge included accumulation by “whales” and a short squeeze phenomenon, while in the last week the asset experienced a drop of nearly 15% and is now undergoing consolidation phases.
Regulation and compliance for Grayscale
Grayscale frames this initiative as part of a broader diversification strategy beyond Bitcoin, noting filings or processing for spot ETFs for Solana (S-1 with a proposed fee of 2.5%), Avalanche, Dogecoin (in partnership with Bitwise and 21Shares, with cited high probabilities of approval), XRP, Cardano (mentioned probabilities of approval) and Hedera (S-1 filed), with the rollout aimed at expanding the offering to institutional and thematic investors.
The regulatory aspect is central because Zcash incorporates an “optional transparency” feature that allows choosing between shielded and transparent transactions; this capability poses challenges for AML/KYC standards and transaction traceability.
Recent history shows regulatory concern, with delistings and scrutiny of the “privacy coins” sector in 2023–2024. Turning an asset with optional privacy into an ETF requires that the issuer and its custodians meet SEC standards on market surveillance and risk control, as well as operational policies that enable auditing and compliance without contradicting the protocol’s capabilities.
