By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish on the 'privacy era' thesis, citing high regulatory risk, illiquidity, and potential ETF limitations. They agree that a 5-10% rotation from Bitcoin into ZEC or XMR is unlikely without significant changes in regulatory environment and exchange accessibility.
Risk: Regulatory risk, including exchange delistings and potential ETF limitations due to AML/KYC requirements.
Opportunity: Potential SEC approval of a privacy-coin ETF, which could signal broader regulatory acceptance and reverse delistings.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Many major crypto insiders are bullish on privacy coins lately.
Zcash's regulatory risks are lower than before, but still substantial.
It's probably the case that privacy coins like Zcash and Monero will steal some capital share from Bitcoin.
Barry Silbert is the founder of Digital Currency Group, which owns Grayscale, one of the largest crypto asset managers. The crypto industry heavyweight declared on X (formerly Twitter) on May 24 that crypto's "privacy era" has begun.
That's a bold claim from a powerful industry insider with a direct stake; Grayscale recently filed with the Securities and Exchange Commission (SEC) to convert its Zcash (CRYPTO: ZEC) Trust into the first U.S. spot exchange-traded fund (ETF) for a privacy coin.
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What's more, at Bitcoin Investor Week in February, Silbert predicted that between 5% and 10% of Bitcoin capital would rotate into privacy-focused crypto like Zcash and Monero (CRYPTO: XMR), arguing that Bitcoin will never be able to offer privacy.
Let's vet what Silbert is claiming and figure out the best course of action to capitalize on what he sees.
Bitcoin's market cap is $1.5 trillion as of this writing on May 27. A 5% to 10% rotation implies $76 billion to $150 billion in capital seeking a home.
Yet Zcash has a market cap of around $9.5 billion, and Monero has a market cap of around $7 billion, so even a fraction of that flow would dwarf the existing market segment and likely lead to its leaders (those two coins and just a couple of others) multiplying in value.
The odds of a major capital rotation into privacy assets have improved, at least for Zcash. The SEC closed a two-year investigation into the Zcash Foundation in January without pursuing enforcement, removing a major regulatory overhang.
Separately, players with plenty of capital are publicly investing in Zcash. Multicoin Capital disclosed a significant Zcash position in May, and a digital asset treasury (DAT) company backed by Winklevoss Capital has been accumulating it since late 2025, targeting an allocation that's 5% of the coin's total supply.
As for the claim that Bitcoin won't ever offer any privacy features, Silbert is almost certainly correct in practice. Major overhauls of the chain are theoretically possible, but adding privacy features would change the nature of what Bitcoin is so radically that it probably won't ever be attempted.
Privacy assets have been popular lately and will likely become even more so in the future, as financial surveillance worldwide expands. That doesn't guarantee these early moments of the privacy era will yield good returns for those who buy the leading privacy coins right this second, though I'm banking on it.
Zcash has already rallied 949% from its 12-month low. Much of the optimism about its future success may be baked into its current valuation.
So even if Silbert is probably correct that we're entering the privacy era, don't bet the farm on it being a gold rush in the near term. Buying a small amount of assets like Zcash in the riskiest segment of your portfolio is the best way to get exposure to the upside if he's right.
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Alex Carchidi has positions in Bitcoin and Zcash. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Monero. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Regulatory tailwind + insider promotion + massive YTD gains = classic setup for disappointment, not the start of a durable 'privacy era.'"
The article conflates regulatory relief with investment thesis viability. Yes, the SEC closed its Zcash investigation—but that's baseline risk reduction, not a catalyst. The real problem: Silbert has direct financial incentive (Grayscale's pending ZEC ETF) to evangelize a 'privacy era,' and the article doesn't seriously interrogate whether 5-10% Bitcoin rotation is plausible or just aspirational. ZEC up 949% YTD means most upside may be priced in. The article also ignores that privacy coins face structural headwinds: exchange delistings, regulatory tightening in major markets, and the fact that Bitcoin's immutability (not privacy) is its core value prop. Capital rotation ≠ guaranteed.
If financial surveillance accelerates globally and institutional demand for privacy assets materializes post-ETF launch, Zcash could be early-stage infrastructure play rather than speculative bubble—and 949% gains could look cheap in hindsight.
"ZEC's post-rally valuation leaves little margin if the privacy rotation proves slower or smaller than Silbert projects."
Silbert's 5-10% Bitcoin rotation thesis implies $75-150B inflows, but ZEC's $9.5B market cap and 949% run from lows already embed much of that optimism. Regulatory closure on the Zcash Foundation probe removes one overhang, yet broader enforcement risk on privacy tools remains live. A key missing variable is whether zk-tech integrations into Ethereum or Bitcoin sidechains erode the need for standalone privacy coins before any rotation completes. Investors treating this as a new regime should size positions for volatility, not conviction.
ZEC could still multiply if even 1-2% of Bitcoin capital rotates faster than expected once spot ETF filings clear, given its tiny float relative to the potential inflow size.
"The lack of Tier-1 exchange support creates a structural liquidity bottleneck that makes a massive capital rotation from Bitcoin into privacy coins functionally impossible in the near term."
Barry Silbert’s pivot to privacy coins is a classic liquidity play, not necessarily a fundamental endorsement of privacy as a long-term asset class. While the SEC’s closure of the Zcash investigation is a positive signal, the article ignores the 'delisting tax.' Major exchanges like Binance and Kraken have already purged privacy coins to appease regulators, severely limiting retail accessibility and liquidity. A 5-10% rotation from Bitcoin into ZEC or XMR is mathematically improbable without institutional-grade on-ramps. Without a clear path to re-listing on Tier-1 exchanges, these assets remain trapped in a regulatory purgatory that will likely suppress price action regardless of investor demand.
If institutional capital flows into a spot Zcash ETF, the resulting liquidity could force major exchanges to reconsider their delisting policies, effectively neutralizing the regulatory risk that currently suppresses price.
"Regulatory headwinds, liquidity constraints, and uncertain ETF approvals cap upside for ZEC/XMR, making a large BTC rotation into privacy coins unlikely in the near term."
The article frames a plausible ‘privacy era’ that could pull a slice of Bitcoin’s $1.5T market into Zcash (ZEC) and Monero (XMR). But the math glosses over real frictions: ZEC/XMR together have sub-$20B in total market cap, meaning a 5-10% BTC rotation would require outsized, illiquid bids to lift prices meaningfully. Regulatory risk remains high (ETF approvals, enforcement posture, and exchange delistings), and even the SEC’s cited review outcome for Zcash is not a green light for broad adoption. Liquidity, custody, and institutional comfort with privacy coins are all weak points. In short, the upside depends on a rare policy and liquidity tailwind that isn’t baked in yet.
Even if regulation lightens, privacy coins could be slammed by AML concerns and delistings, so the supposed upside hinges on an improbable confluence of policy, liquidity, and investor demand.
"ETF approval bypasses exchange delisting friction but creates binary regulatory-signal risk that nobody's priced in yet."
Gemini nails the delisting tax—but everyone's underweighting the ETF's structural bypass. A spot ZEC ETF doesn't require Binance relisting; it creates a parallel on-ramp that institutional custodians (Fidelity, Coinbase Custody) can service directly. That flips the liquidity constraint. The real question: does SEC approval of a privacy-coin ETF signal broader regulatory acceptance, or is it a one-off carve-out? If the former, delistings reverse. If the latter, ZEC becomes a closed ecosystem play with artificial scarcity—bullish for price, bearish for adoption.
"Privacy coin ETFs face insurmountable custody compliance hurdles that Bitcoin ETFs never encountered."
Claude assumes an ETF creates a clean bypass, yet overlooks how privacy coin AML tracing requirements could block major custodians from participating. Fidelity and Coinbase already screen for sanctions exposure; ZEC's shielded transactions make that verification impossible without compromising the privacy value prop. This turns the ETF into a regulatory non-starter rather than a liquidity solution, regardless of the SEC's Zcash probe closure.
"Institutional ETFs for privacy coins will likely force transparency, nullifying the core value proposition of the underlying asset."
Grok, you're missing the technical reality: Zcash supports transparent addresses. An institutional ETF would likely mandate transacting solely through these transparent channels, effectively stripping the 'privacy' feature to satisfy AML/KYC compliance. This creates a bifurcated market: a compliant, transparent ETF product and a separate, 'toxic' shielded-pool asset. The ETF won't be a privacy tool; it will be a synthetic proxy, rendering the 'privacy era' narrative largely irrelevant for the institutional capital you're tracking.
"An ETF alone likely won’t deliver real liquidity for ZEC; AML/KYC constraints and optional transparent channels could limit demand, turning the ETF into a proxy with limited upside."
Claude's ETF-bypass thesis overstates the practical liquidity fix. Even with a spot ZEC ETF, institutional custodians will demand end-to-end AML/KYC controls, and shielded transactions threaten sanction checks, so the ETF may become a proxy with limited true liquidity. If regulators require indivisible exposure through transparent addresses, the privacy edge vanishes, hindering rotation from Bitcoin and capping upside. In that case, the thesis looks more like a structural dispute than a liquidity windfall.
The panel consensus is bearish on the 'privacy era' thesis, citing high regulatory risk, illiquidity, and potential ETF limitations. They agree that a 5-10% rotation from Bitcoin into ZEC or XMR is unlikely without significant changes in regulatory environment and exchange accessibility.
Potential SEC approval of a privacy-coin ETF, which could signal broader regulatory acceptance and reverse delistings.
Regulatory risk, including exchange delistings and potential ETF limitations due to AML/KYC requirements.