ZCASH (ZEC) SECURITIES INVESTIGATION CLOSED Without Enforcement Action

The U.S. Securities and Exchange Commission (SEC) closed its two-year investigation into the Zcash Foundation without recommending enforcement action or operational changes.
Zcash's non-profit structure, transparent governance, and compliance-focused design were cited as key factors in the SEC's decision, differentiating it from other crypto projects under scrutiny.
Zcash's price rose nearly 14% following the announcement, reflecting improved investor sentiment, though internal governance challenges persist.

The U.S. Securities and Exchange Commission (SEC) has concluded its two-year investigation into the Zcash Foundation without recommending enforcement action or operational changes. The decision offers regulatory clarity for the privacy-focused cryptocurrency. This outcome followed an in-depth review of Zcash's governance structure, fundraising activities, and token distribution mechanisms under U.S. securities law.

The SEC's decision was influenced by Zcash's non-profit structure and compliance-friendly design, which helped differentiate it from other crypto projects under regulatory scrutiny. The Zcash Foundation emphasized its commitment to transparency and adherence to applicable legal requirements as key aspects of the investigation's favorable outcome.

The resolution of the SEC's probe removed a regulatory overhang that had affected investor confidence. Zcash's price surged nearly 14% immediately after the announcement, indicating improved market sentiment. However, the Zcash ecosystem continues to face internal governance challenges. These include the Electric Coin Company's resignation from the Bootstrap Foundation and the formation of a new development entity, cashZ.

Why Is the SEC's Closure of This Investigation Significant for Privacy Coins?

The SEC's decision to close its investigation into Zcash without enforcement action represents a broader regulatory trend of resolving cases without penalties. This signals a more nuanced approach to evaluating blockchain projects in the U.S. The closure may encourage other privacy-focused projects to engage proactively with regulators while emphasizing compliance and transparency. Zcash's non-profit structure and governance played a central role in its favorable outcome, demonstrating that privacy-enhancing technologies can operate within existing legal frameworks.

This development is particularly relevant for privacy coins like Monero and Dash, which also rely on strong governance and privacy features. However, Zcash's recent governance issues underscore the importance of maintaining robust leadership and transparency, especially in the post-SEC environment.

What Risks Remain for Zcash Despite the SEC's Decision?

Despite the positive regulatory outcome, Zcash faces ongoing internal governance challenges. The Electric Coin Company (ECC), Zcash's core development team, resigned from the Bootstrap Foundation and formed a new independent entity, cashZ. This split highlights the need for strong project leadership and governance structures to ensure long-term development continuity and investor confidence.

While the SEC's decision offers legal clarity, it does not resolve internal conflicts within the Zcash ecosystem. These governance disputes could pose long-term risks to the project's sustainability and market perception. Investors are advised to closely monitor Zcash's governance developments and their impact on the project's trajectory .

What Does This Mean for the Privacy Coin Market?

The regulatory clarity provided by the SEC's decision is a positive signal for the broader privacy coin market. Privacy coins such as Monero and Dash have historically faced regulatory scrutiny due to their anonymity-enhancing features. Zcash's outcome may serve as a benchmark for how similar projects are evaluated within U.S. legal frameworks .

The overall cryptocurrency market has shown positive sentiment toward privacy coins, with Monero and Dash reaching record highs in 2025. However, Zcash's recent leadership crisis has led to a loss of investor confidence, with its price dropping 26% in a single week due to centralized governance issues .

The SEC's decision to close its Zcash investigation without enforcement action marks an important milestone for privacy-focused crypto projects. It highlights the potential for privacy coins to operate within regulatory boundaries if structured and governed transparently. However, ongoing governance challenges within Zcash and other privacy coins remain a key risk factor for investors and market participants .