ZCASH DEVELOPERS LEAVE ECC OVER GOVERNANCE DISPUTES, FORM NEW ENTITY

• Zcash developers left Electric Coin Company (ECC) following governance disputes and have formed a new for-profit startup, cashZ, to continue development independently according to reports.
• The Zcash governance crisis led to a sharp sell-off in ZEC, with the token dropping roughly 10–20% amid uncertainty over future development stewardship.
• The core disagreement centered on governance and control, with the ECC team describing the situation as a constructive discharge due to untenable working conditions.

The internal dispute within the ECC board over governance and working conditions led to the formation of a new company to continue Zcash development as reported. This move aims to provide greater flexibility and reduce friction associated with nonprofit governance structures. The Zcash protocol itself remains fully operational and unaffected according to the team.

The new entity, cashZ, intends to operate independently and with greater agility compared to the previous nonprofit governance model as explained. This transition is seen as potentially beneficial for long-term decentralization and governance risk reduction. Zcash development will continue through cashZ, the Zcash Foundation, and community efforts according to analysis.

What Is the Governance Conflict About?

The governance conflict was primarily between the Electric Coin Company (ECC) and the Bootstrap board, with accusations of misalignment with Zcash's original mission as reported. The ECC team described the situation as a constructive discharge, where working conditions were altered to make it impossible for the team to continue. This led to a complete exit of the ECC team and the formation of a new, independent company according to reports.

The governance structure of Zcash has been criticized for its centralization, with the Electric Coin Company controlling development decisions. The recent dispute highlights the structural flaws in Zcash's governance model and the risks of centralized control in privacy-focused crypto projects. Unlike projects such as Monero and Dash, which have more decentralized governance structures, Zcash's reliance on a single development team makes it more vulnerable to such conflicts as noted.

The governance crisis has raised questions about the long-term viability of privacy-centric cryptocurrencies. Zcash's compliance-friendly design faces regulatory scrutiny under MiCA/AMLA, complicating its institutional adoption potential according to analysis. Analysts warn that governance instability threatens the long-term viability of privacy coins despite technical innovations like Halo 2.

What Is the Impact on ZEC Price and Market?

The ZEC price dropped roughly 10–20% following the governance dispute, reflecting investor uncertainty as reported. The token fell approximately 7% before recovering some ground amid heavy trading according to data. The 24-hour trading volume surged by over 30% to approximately 800 million as market participants reassessed the project's outlook according to trading data.

The market reaction was swift, with ZEC falling to a level of around $455 after reaching a short-lived level of about $480 according to reports. The volatility was driven by concerns over the long-term governance and development of Zcash. Zcash founder Zooko Wilcox reassured users that the dispute had no impact on the network's security or privacy assurances according to statements.

The broader privacy-focused cryptocurrency sector was also affected, with the incident reigniting debates about governance structures in decentralized projects as analyzed. The privacy narrative persists despite setbacks for individual projects, with regulatory pressure, exchange delistings, and competition from privacy layers on general-purpose blockchains presenting ongoing challenges according to industry reports.

What Is the Future Outlook for Zcash Development?

The newly formed company aims to continue privacy-focused development independently according to reports. The Zcash Foundation, a separate nonprofit organization, supports protocol development and may provide continuity, though coordination challenges will need to be addressed. The Electric Coin Company and Bootstrap are expected to reassess how protocol development is funded and coordinated going forward as reported.

The Electric Coin Company crisis represents a critical juncture for Zcash. The protocol continues functioning normally despite organizational turmoil according to analysis. The question now is whether the Zcash community can successfully transition from corporate-supported development to truly decentralized governance, or if organizational fragmentation will lead to a slow decline.

Governance structures matter immensely in decentralized projects, and the recent crisis has exposed vulnerabilities in centralized governance models as noted. The privacy narrative persists despite setbacks for individual projects, but the long-term investment thesis for ZEC has fundamentally changed, requiring a reassessment of assumptions about organizational support according to analysis.

The new development model aims to reduce governance friction and operate with greater flexibility. The Zcash Foundation and community efforts are expected to play a key role in the future development of the project as reported. The focus will be on maintaining the privacy-first ethos of Zcash while addressing the structural governance issues that led to the recent crisis.