Grayscale submits application for Zcash Spot ETF, how much higher can the leader in Privacy Coins ZEC rise?

The world's largest digital asset management company Grayscale has submitted an S-3 registration statement to the U.S. Securities and Exchange Commission, planning to convert its Zcash trust into a Spot ETF, which will be the first regulated exchange-traded fund focused on Privacy Coins. The trust currently holds approximately $150 million worth of ZEC, and after the conversion, it will be listed on the NYSE Arca with an annual fee rate of 2.5%. This move marks the formal entry of privacy-enhanced Crypto Assets into mainstream financial visibility, coinciding with the announcement by India's Reliance Group that it will convert its entire crypto portfolio to ZEC. Zcash is currently priced at $505, ranking among the top fifteen in market capitalization for cryptocurrencies.

Grayscale Strategic Layout: The Evolution from Bitcoin to Privacy Coin ETF

The S-3 registration statement submitted by Grayscale is an important step in the expansion of its digital asset product line, continuing the company's strategic vision of mainstreaming professional crypto asset investment products. Compared to the conventional ETF registration process, the S-3 form, as a simplified registration format, allows issuers that meet specific conditions to complete product conversions more efficiently. Grayscale's ability to utilize this channel benefits from its good record as a reporting company, existing trust size, and successful product conversion experience—having previously converted its Bitcoin Trust and Ethereum Trust into Spot ETFs in 2024, paving the way for regulatory and operational precedents for Zcash products.

From a technical perspective, the proposed Zcash ETF will directly hold physical Zcash tokens and track the performance of the CoinDesk Zcash price index. The application documents also include a request for a rule change under 19b-4, aimed at obtaining permission for listing and trading on NYSE Arca. This arrangement follows the same model as the other two ETF products that Grayscale recently successfully listed on the New York Stock Exchange, indicating that the company has established a standardized ETF issuance process. It is noteworthy that Grayscale has built a complete regulatory compliance framework over the past three years and has established constructive communication channels with the U.S. Securities and Exchange Commission, which adds a unique advantage to the approval of its Privacy Coin ETF.

From the perspective of market timing, Grayscale's decision to push forward with the Zcash ETF at this time is not coincidental. The company immediately began preparing privacy coin products after the approval of Bitcoin and Ethereum ETFs, perfectly aligning with institutional investors' growing demand for differentiated crypto assets. According to internal data from Grayscale's parent company, Digital Currency Group, inquiries from institutional clients about privacy-protecting cryptocurrencies surged by 300% year-on-year in the first quarter of 2024, providing a solid market demand basis for product conversion. At the same time, the recent clarification by the U.S. Securities and Exchange Commission regarding the classification of cryptocurrencies has also provided a clearer legal framework for positioning privacy coins as non-securities digital assets.

Grayscale Zcash Trust conversion key information

Current trust size: 150 million USD

Application Type: S-3 Registration Statement

Target product: Spot Zcash ETF

Planned exchange: NYSE Arca

Annual sponsorship fee rate: 2.5%

Price Index Benchmark: CoinDesk Zcash Price Index

Current holdings: approximately 300,000 ZEC (calculated at the current price)

Compliance Challenges of Privacy Coins: How ZK Technology Integrates into Regulatory Frameworks

As a privacy crypto asset based on zero-knowledge proof technology, Zcash's ETF application faces unique regulatory challenges. Unlike the transparent ledgers of Bitcoin and Ethereum, Zcash achieves selective disclosure of transaction information through zk-SNARKs technology, meaning that transaction details can be hidden from the public while still verifying the validity of the transaction. This privacy-enhancing feature, while meeting the basic needs for financial privacy, has also raised concerns among regulators regarding compliance with anti-money laundering and counter-terrorism financing regulations. Grayscale explicitly acknowledges this risk in its application documents and details how it will work with regulators to ensure compliance.

From a technical implementation perspective, Zcash's privacy features are not absolute anonymity, but rather provide a hybrid model that coexists with “shielded” and “transparent” addresses. In practical applications, institutional-level users can fully utilize Zcash while complying with regulatory requirements—conducting auditable transactions through transparent addresses, while using shielded addresses to protect sensitive commercial information. Grayscale emphasizes in its application materials that the proposed ETF will primarily operate using a transparent address model to ensure that regulators can track the fund's Zcash liquidity. At the same time, the fund will also introduce on-chain monitoring tools and collaborate with compliance solution providers to meet the Financial Action Task Force's “travel rule” requirements.

In terms of regulatory precedents, the attitude of U.S. financial regulators towards privacy-enhancing technologies is gradually evolving. The Securities and Exchange Commission has previously approved several Bitcoin futures ETFs and Spot ETFs, while the Commodity Futures Trading Commission classified Zcash as a commodity as early as 2018, treating it on par with Bitcoin and Ethereum. More importantly, the Office of the Comptroller of the Currency issued an interpretive letter in 2021, explicitly authorizing national banks to use privacy technologies for payments as long as they comply with existing financial regulations. These regulatory decisions have created a favorable environment for the eventual approval of Zcash ETFs, indicating that regulators have begun to distinguish between the concepts of 'privacy' and 'anonymity.'

Market Demand Analysis: Why Institutional Investors Embrace Privacy Coins

The launch of the Zcash ETF comes at a crucial moment when institutional demand for Privacy Coins has significantly increased. The recent decision by India's multinational conglomerate Reliance Group to convert its entire Crypto Assets portfolio into ZEC has garnered widespread attention among institutional investors. This move is seen as a recognition of the value of privacy-oriented digital assets by large corporations and also reflects CFOs' concerns about blockchain transparency — while public ledgers enhance transparency, they also expose companies' trading strategies, supplier relationships, and cash flow details to competitors. The selective disclosure feature of Zcash precisely addresses this dilemma.

From the perspective of asset allocation theory, Privacy Coins provide unique risk-return characteristics for institutional portfolios. Compared to traditional Crypto Assets, the 30-day price correlation of Zcash with Bitcoin is about 0.65, and with Ethereum, it is about 0.72. This moderate level of correlation makes it an effective diversification tool in a Crypto Assets portfolio. More importantly, during periods of geopolitical tension, Privacy Coins often exhibit unique hedging characteristics— for example, in the first quarter of 2024, when traditional Crypto Assets performed poorly due to regulatory pressures, Zcash actually rose by 35% due to increased demand from European institutional investors.

The demand is also driven by the evolution of the wealth management industry. As digital native customers gradually accumulate wealth, there is a tension between their need for financial privacy and the transparency of traditional banking systems. Morgan Stanley's 2024 Digital Asset Survey shows that the interest of high-net-worth clients in privacy-protective investment products has jumped from 18% in 2023 to 42% in 2024. This shift in demand has prompted wealth management firms to actively seek privacy-enhancing investment options that comply with regulatory requirements, and the regulated Zcash ETF perfectly fills this market gap. Grayscale has recognized this trend, which is why it has accelerated its Zcash trust conversion plan.

ZEC Price Prediction: Bull and Bear Divergence Intensifies

Regarding the future price of Zcash (ZEC), well-known figures and institutions have recently provided highly varied target predictions, becoming one of the most controversial topics in the Privacy Coin sector. Bulls bet on privacy assets returning to a core position in the next round of the crypto cycle, while conservatives emphasize regulatory uncertainty and high volatility, making ZEC's long-term path full of variables. From market sentiment to institutional valuation, ZEC's price predictions are forming a pattern of “polarized tearing”.

Arthur Hayes: Privacy assets will be revalued, ZEC may hit 10,000 USD

Arthur Hayes's view is the most explosive. He directly predicts that ZEC has the “opportunity to hit $10,000” in the future and emphasizes that privacy technology will once again become an infrastructure-level component in the encryption financial system. Hayes's remarks have sparked strong FOMO in the community, which once drove ZEC to rise sharply in a short period.

From his logic, the potential of ZEC lies not only in its privacy attributes but also in its possibility of becoming the “liquidity entry point” for the next generation of zero-knowledge proof application scenarios. If the next bull market unfolds in a parallel mode of privacy and compliance, ZEC may become the biggest beneficiary of this narrative.

Market analysts interpret: Short-term sentiment is strong, impacting 900–1,000 USD

Trading platforms and independent analysts generally believe that ZEC maintains an upward trend in its technical structure. As long as the current liquidity is sustained, the short-term target range will focus on $900–1,000. Some platforms' trend models even suggest that there is still about 40%–50% room for short-term growth.

Factors supporting this view include:

• Key resistance has been broken;
• The funding situation is improving, and the privacy sector is recovering;
• Market rotation shifts attention from mainstream coins to high elasticity assets.

However, analysts also emphasize that once market attention shifts or regulatory news causes fluctuations, the gains of ZEC may quickly evaporate, and short-term risks remain significant.

Long-term Valuation Model: 2030 forecast concentrated at $950–$1,000

In more systematic predictions, several third-party platforms have provided long-term targets based on supply and demand models and inflation curves that converge relatively, focusing around $950–1,000. These models generally believe that:

• The demand for privacy assets is showing a steady growth trend;
• The scarcity structure of ZEC provides long-term support for its price;
• Mainstream financial institutions will ultimately embrace privacy-enhancing technologies.

These long-term forecasts are relatively conservative yet more realistic, belonging to the baseline scenario of “Privacy Coin moderately returning to the mainstream.”

Conservative voices: ZEC is still overvalued, with a fair price potentially in the hundreds of dollars.

Compared to optimists, the predictions of conservative institutions are clearly more cautious. Based on current liquidity, compliance pressure, and funding structure, multiple risk control models estimate the average price of ZEC in 2025 to be around $300–350, with most ranges falling between $155–$526 .

They think:

• Privacy Coins will still face regulatory scrutiny in the future;
• Mainstream funds are more inclined towards liquidity assets such as BTC, ETH;
• The volatility of ZEC is too high, with a 30%-60% retracement risk.

For these types of institutions, the rise of ZEC is more driven by temporary sentiment rather than a structural revaluation of value.

Market Impact and Future Prospects: The Turning Point for Privacy Coins

The Grayscale Zcash ETF application has begun to have a significant market impact. Following the announcement, the price of ZEC slightly rose to $505 within 24 hours, and the token has accumulated an increase of about 45% over the past 30 days. More notably, Zcash's total market capitalization ranking has re-entered the top fifteen Crypto Assets, marking its highest position since 2022. Market depth data indicates that institutional investors are accumulating ZEC in preparation for potential price increases after the ETF approval—similar to what occurred six months before the approval of the Bitcoin ETF, when institutional accumulation led to a 120% increase in Bitcoin before the ETF officially began trading.

From the perspective of the industry ecosystem, Grayscale's move may trigger a wave of innovation in financial products related to Privacy Coins. There are already indications that other asset management companies are closely monitoring the progress of Grayscale's application, with VanEck and Bitwise reportedly discussing similar Privacy Coin products internally. On the exchange side, in addition to NYSE Arca, CBOE and NASDAQ have also expressed an open attitude towards listing innovative Crypto Assets products. With increased regulatory clarity, a series of regulated Privacy Coin financial products may be launched one after another before 2026, fundamentally changing the marginalized market position of Privacy Coins.

Looking ahead to the approval prospects, analysts expect the U.S. SEC to make a preliminary response to Grayscale's application within 90-180 days. Key considerations in the approval process will include: market manipulation prevention measures, the robustness of custody solutions, and the integrity of the compliance framework. As the most regulated and experienced Crypto Assets management company, Grayscale has a relatively high probability of having its application approved. If approved, the Zcash ETF will become a watershed event in the Crypto Assets industry, marking the formal recognition of privacy-enhancing technology by the mainstream financial system and paving the way for the financial productization of other Privacy Coins such as Monero and Dash.

Grayscale's application to convert the Zcash trust into a Spot ETF is far more than just the birth of another Crypto Assets ETF; it is an important declaration of privacy as a fundamental financial right in the digital age. As institutional investors begin to allocate privacy-enhanced assets through regulated channels, and as mainstream exchanges provide compliant trading platforms for anonymous technologies, we are witnessing a paradigm shift in the concept of financial privacy. Balancing regulation and innovation has never been easy, but Grayscale's attempt may pave a middle path—respecting regulatory requirements while preserving individuals' reasonable expectations of financial privacy. In the coming months, as the U.S. SEC reviews this groundbreaking application, its outcome will not only determine the market fate of Zcash but will also set the tone for the financialization of the entire privacy-enhanced technology industry.