SEC Closes Zcash Foundation Probe, No Enforcement Action Taken

SEC Concludes Two-Year Probe Without Enforcement

The investigation began with a subpoena issued in August 2023, titled “In the Matter of Certain Crypto Asset Offerings (SF-04569).”

It aimed to determine whether certain aspects of Zcash’s operations and token distribution were subject to U.S. securities laws. After more than two years of regulatory review, the SEC informed the Foundation that it did not plan to recommend any enforcement actions.

The ending of the Zcash probe coincides with a broader shift in U.S. enforcement strategy toward crypto.

Since 2025, with new leadership at the SEC, several high-profile cases that previously posed risks to major market participants have been either settled or dropped.

Additionally, some investigations have concluded without any penalties. Stakeholders perceive this as a shift towards engagement rather than solely focusing on litigation related to token classification.

The Zcash Foundation believes that the lack of enforcement action has greatly reduced the regulatory uncertainty that has been a concern for both investors and developers.

The privacy features of Zcash, particularly the optional shielded transactions supported by zero-knowledge proofs, have traditionally placed the project in a challenging position with regulators who are worried about compliance with anti-money laundering laws.

The SEC’s standard practice is not to comment on active investigations, and in this case, it did not issue a statement detailing its reasoning or whether it made formal findings during the review. Officials typically reserve comment for enforcement actions or settlements.

Market Response: ZEC Gains After Regulatory Relief

Markets reacted swiftly to the news. Zcash’s native cryptocurrency, ZEC, rose by more than 10 percent in the hours following the announcement, with some trading platforms reporting gains of about 12 to 13 percent.

• Prices peaked at around $430 to $440, reflecting relief among traders who had anticipated potential regulatory risks.
• Trading volumes also increased as participants adjusted their positions.

Despite this surge, ZEC’s price remains significantly below its all-time high from the 2017–2018 crypto cycle, highlighting how ongoing regulatory and market volatility continue to influence valuations.

Governance Headwinds

The regulatory development comes at a turbulent time for the Zcash community. In early January 2026, the core technical development team at Electric Coin Company (ECC), which originally engineered the Zcash protocol, resigned following a public dispute with the project’s nonprofit governance body, Bootstrap.

Former leadership at ECC characterized the departures strongly, reflecting wider concerns about alignment in management and the continuity of the project’s mission.

The Zcash Foundation has emphasized that the protocol’s decentralized nature and open-source codebase will ensure that the network continues to operate securely and without interruption.

However, the mass resignation of experienced developers introduces uncertainty regarding future upgrades and may complicate efforts to secure institutional support.

Regulatory Implications for Privacy Coins

Zcash’s situation emphasizes the intricate regulatory landscape surrounding digital assets that prioritize privacy.

While this particular SEC chapter has closed without action, global regulators have taken varied stances on anonymity features, with some jurisdictions restricting or delisting similar tokens over compliance concerns.

The U.S. closure does not constitute an endorsement of privacy technologies, but it does set a precedent for how cooperative organizations might navigate regulatory review.

Experts in digital asset law view the outcome as a positive signal that transparent cooperation with regulators can yield clarity without punitive outcomes. For projects with U.S. roots or significant U.S. participation, building compliance frameworks and engaging regulators early appears increasingly vital.

What Comes Next?

Now that the SEC chapter is concluded, the Zcash Foundation will refocus on its core mission of advancing privacy-focused financial infrastructure.

The next phase of the network involves stabilizing development after ECC’s departure, attracting contributions from the wider ecosystem, and engaging with evolving legislative efforts that seek clearer definitions for digital assets.

As policymakers continue to debate comprehensive crypto regulation, the Zcash outcome could serve as an important reference point for how enforcement discretion and cooperative compliance interact in a regulatory landscape still taking shape.