Grayscale just filed to convert its Zcash Trust into an ETF. That sounds like good news for mainstream adoption. But privacy-coin purists see something darker: Wall Street preparing to control the very asset designed to escape it.
The filing landed November 26, 2025. It seeks to transform a trust holding 394,000 ZEC—worth roughly $197 million—into a fully regulated exchange-traded fund. For Zcash believers, this isn’t just another investment product. It’s an existential threat to decentralization.
Privacy Coins Don’t Belong in ETF Wrappers
Eric Van Tassel put it bluntly on X: “I hope ZEC never gets one, as once that happens, an asset is no longer decentralized.”
He’s not alone in that view. Plus, his concern runs deeper than abstract principles. ETFs concentrate power among Wall Street firms that control trading, market-making, and custody decisions. For a privacy-focused cryptocurrency, that concentration undermines the entire mission.
“An ETF effectively means that an asset value will be highly influenced and controlled by Wall Street,” Eric warned. Meanwhile, SEC filings show Grayscale’s Zcash Trust already controls about 2.4% of ZEC’s circulating supply. That’s one of the highest institutional concentrations among privacy coins. Converting to an ETF would only amplify that influence.
The Grayscale Bitcoin Trust offers a cautionary tale. When GBTC converted to an ETF in January 2024, redemptions created brutal sell-side pressure. Bitcoin repeatedly dipped as institutional outflows dominated market action. So critics fear Zcash faces the same fate.
The Discount Tells the Real Story
Market pricing already reflects investor anxiety. The Grayscale Zcash Trust trades at a steep discount:
- NAV per share: $42.59
- Market price: $35.05
- Discount: approximately 18%
That 18% gap signals trouble. Shareholders either anticipate ETF-linked selling pressure or simply won’t pay full value for assets facing regulatory uncertainty. The trust manages $205.7 million, charges a hefty 2.5% expense ratio, and has 4.83 million shares outstanding.
High fees plus regulatory ambiguity equals nervous investors. Thus, the discount persists even as Grayscale pushes forward with ETF plans.
Zcash Outperformed Precisely Because It Escaped ETFs
Here’s the ironic part. ZEC has crushed several major altcoins in recent months. Critics argue that’s precisely because it remains outside ETF control.
“The fact that Zcash does not currently have an ETF might be a good reason why Zcash has been moving so well,” Eric noted. Without institutional flows dictating price action, ZEC trades more organically. Retail demand and genuine utility drive moves instead of Wall Street redemption cycles.
Eric even speculates Bitcoin’s ETF structure has capped its upside: “I see $140,000 to $150,000 max out of Bitcoin this cycle. Money will roll into the assets that these ETFs don’t control.”
Bold prediction. But the logic holds. Institutional products create predictable flows. Those flows dampen volatility but also limit explosive upside. For Zcash advocates who remember triple-digit percentage gains, ETF constraints feel like surrender.
Wall Street’s Trojan Horse Strategy
Eric calls ETFs “a Trojan horse” for crypto. His argument goes beyond individual assets. He sees a coordinated strategy to either destroy crypto independence or absorb it into traditional finance.
“The recent dump was influenced by these giant institutions that now control many of these assets,” Eric said. “Their ultimate goal is to either destroy crypto or completely control it as a part of their CBDC agenda.”
That sounds conspiratorial. Yet regulatory patterns support the concern. The SEC approves Bitcoin and Ethereum ETFs while simultaneously cracking down on privacy coins through exchange delistings and compliance requirements. So the path forward looks clear: conform to institutional standards or face marginalization.
A Zcash ETF would complete that transformation. What started as censorship-resistant electronic cash becomes just another Wall Street product with privacy features tacked on. However, privacy can’t exist as a feature. It requires structural decentralization that ETFs fundamentally undermine.
The SEC Holds All the Cards
The Electric Coin Company develops Zcash protocol. But the SEC decides whether this ETF happens. If approved, it becomes the first-ever ETF tied to a major privacy coin. That would rewrite regulatory precedent for similar assets.
Approval also creates downstream consequences. Other privacy coins would face pressure to follow suit. Investors would demand regulated products. Exchanges would favor assets with institutional backing. Gradually, the entire privacy-coin sector could shift from grassroots decentralization to Wall Street management.
Market reaction so far suggests uncertainty. ZEC gained just 0.7% in the 24 hours following Grayscale’s announcement. That muted response tells you something. Investors either fear the ETF implications or doubt the SEC will approve it.
What Zcash Loses If This Happens
Zcash was built for financial privacy in a surveillance era. The core value proposition is transacting without government or corporate monitoring. That mission requires genuine decentralization where no single entity controls significant supply or trading infrastructure.
An ETF breaks that model. Wall Street firms become gatekeepers. They decide custody arrangements, trading venues, and ultimately price discovery mechanisms. For retail holders who value privacy above liquidity, that’s a terrible trade.
Critics argue Bitcoin already surrendered to institutional control. Perhaps they’re right. Bitcoin ETFs brought mainstream attention and price stability. But they also created new dependencies on traditional finance rails. Now Bitcoin moves when Wall Street says it moves, not when the network’s fundamentals change.
Zcash could avoid that fate by rejecting ETF products entirely. Obviously, that won’t happen if the SEC approves Grayscale’s filing. So the question becomes whether Zcash’s mission can withstand Wall Street’s gravitational pull, or whether privacy becomes another marketing feature in a fundamentally compromised asset.
Nobody asked for a Zcash ETF. Yet here we are, watching institutional finance prepare to absorb the crypto sector’s most privacy-focused major asset. The irony is thick. The consequences could reshape how we think about decentralized money.