Grayscale Seeks First Spot ETF for Privacy Coin as Zcash Demand and Regulation Shift

Grayscale has filed to convert its Zcash Trust into a spot exchange-traded fund (ETF), a move that could become the first approved ETF in the United States tied to a privacy-focused cryptocurrency. If approved, the product would represent a major milestone for regulated access to privacy coins like Zcash (ZEC).

The filing comes shortly after reports that the US Securities and Exchange Commission concluded a long-running review of privacy coins in early 2026 without taking enforcement action. This development has reduced regulatory uncertainty around the sector and opened the door for potential institutional products.

Institutional Interest Grows as Hedge Funds Accumulate ZEC

Alongside the ETF filing, Multicoin Capital co-founder Tushar Jain disclosed that the hedge fund has been steadily accumulating ZEC since February. The position is described as a macro hedge linked to concerns about increasing government oversight of private financial activity.

Jain also referenced proposed wealth tax discussions, suggesting that demand for mathematically private assets could rise if financial transparency rules expand further.

Custody and Transparency Challenges Remain Key Barrier

A major hurdle for a Zcash ETF is custody structure. Around 30% of ZEC supply is currently stored in shielded addresses, which preserve transaction privacy but are difficult to audit. Traditional ETF frameworks typically require transparent holdings to ensure regulatory compliance and proof of reserves, creating a structural challenge for approval.