Privacy-centric digital asset ZCash surged by roughly 15% after reports surfaced that Grayscale Investments had filed for a privacy-focused exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC).
Data from CryptoSlate reveals that ZEC reached a high of nearly $30 before pulling back to around $28 as of press time.
Grayscale, known for its pioneering Bitcoin ETF, seeks to expand its offerings into privacy-focused assets. Despite significant outflows recently, its flagship fund, GBTC, remains the market leader with approximately $22.9 billion in assets under management.
Grayscale’s privacy ETF
The Privacy ETF represents an index-based fund designed to track the performance of companies within five key sub-themes of the data privacy sector.
These include data service solutions, cyber service providers, blockchain-based privacy solutions, network and communication security providers, and privacy-preserving protocols.
According to the filing, inclusion in the Index requires companies to derive over 50% of their revenues from these sub-themes.
Eligible firms must publicly trade on US, non-US developed markets, or emerging market stock exchanges. They must also possess a market capitalization of at least $250 million and meet specific liquidity criteria.
ETF to invest in Grayscale Zcash Trust
The filing stated that the Privacy ETF’s Index will allocate 10% of its funds to Privacy-Preserving Protocols via the Grayscale Zcash Trust (ZCSH).
ZCSH functions as an investment vehicle exclusively tied to the value of ZCash’s native ZEC token. According to Grayscale’s website, the fund holds $7.7 million worth of crypto tokens as of Feb. 21.
ZEC operates on a decentralized, open-source network, enabling users to transact without revealing sensitive information like transaction parties. The digital asset ranks fourth among the largest privacy tokens by market capitalization, trailing Monero, Mina, and Worldcoin.
Meanwhile, this development unfolds against heightened regulatory scrutiny on privacy tokens. Coins like Monero have faced regulatory attention due to concerns over potential illicit use, prompting major exchanges such as OKX and Binance to remove them from their platforms.
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