Zcash Governance Clash Tanks the ZEC Token. Here's Why It May Not Be as Big as It Seems

Zcash (ZEC) fell nearly 14% on Thursday as a governance conflict between the Electric Coin Company (ECC) and Bootstrap, a nonprofit overseeing the project, escalated. The core development team at ECC resigned following a dispute with Bootstrap's board.

The resignation came after the team claimed changes to employment terms made it impossible to continue their work effectively. ECC CEO Josh Swihart called the situation 'constructive discharge' and stated that the team had left to protect their work from what they described as malicious governance actions.

Despite the exit, the Zcash protocol remains unaffected. The team plans to form a new company to continue building privacy-focused financial tools. Zcash's open-source nature ensures the network continues to run without disruption.

Why Did This Happen?

The dispute centered on governance and employment conditions. Bootstrap, a 501(c)(3) nonprofit, oversees the Zcash project and recently made changes that ECC team members claimed were misaligned with the project's mission.

Josh Swihart identified specific board members—Zaki Manian, Christina Garman, Alan Fairless, and Michelle Lai—as having deviated from Zcash's original vision. This shift led to a breakdown in trust, prompting the team to resign.

Swihart emphasized that the Zcash codebase is open-source and not owned by any single entity. As a result, the network continues to function despite the internal conflict.

How Did Markets React?

Zcash's price plunged after the news. The token dropped to a low of $381, wiping out nearly 14% of its value in a single day. It recovered slightly to $401 but remained well below its recent levels.

The sell-off was sharp and immediate. Some investors moved their funds to other privacy-focused cryptocurrencies in response to the uncertainty.

Zcash had enjoyed a strong rally in late 2025, with a peak market cap above $10 billion. The recent governance issue has raised concerns about the project's long-term governance structure and stability.

What Are Analysts Watching Next?

Analysts are monitoring whether the newly formed company led by the former ECC team will successfully continue Zcash's development. The team has not provided a timeline for when the new entity will begin operations.

Investors are also watching for regulatory developments. Zcash is among the cryptocurrencies without a dedicated digital asset treasury. Analysts believe that regulatory clarity and institutional adoption could play a major role in the token's future performance.

The broader crypto market is in a mixed mood, with investor sentiment shifting toward neutral. The Crypto Fear and Greed Index recently flipped to 'neutral' for the first time since October 2025, indicating that fear has eased but optimism has not yet returned.