SEC Clears Zcash Foundation as ZEC Rallies on Regulatory Relief

The SEC has concluded its review of the Zcash Foundation and informed the nonprofit that it does not intend to recommend any enforcement action or other regulatory changes tied to that matter. 

The decision removes a long-running legal overhang that had followed Zcash for more than two years.

A Two-Year Investigation Ends

ZEC surged on the news. The token traded near $440, up about 13% on the day, with heavy volume as traders priced in lower regulatory risk.

However, the move also came after days of intense governance turmoil inside the Zcash ecosystem, which had earlier pushed the token sharply lower.

The SEC first targeted the Zcash Foundation in August 2023, when it issued a formal subpoena under a broad investigation labeled “Certain Crypto Asset Offerings.”

The agency sought information on whether Zcash-related funding, governance, or token distribution could fall under US securities law.

Like many crypto probes during that period, the inquiry focused on whether any part of the project resembled an unregistered securities offering. Zcash’s privacy-focused design and US-based foundation placed it under added scrutiny.

Now, more than two years later, the SEC has closed the matter without recommending charges, fines, or compliance changes.

Governance Turmoil Hit Zcash

While the regulatory case lingered quietly, Zcash faced a new crisis this month.

Last week, the entire core development team at Electric Coin Company (ECC) resigned after a public dispute with the Bootstrap Foundation, which oversees Zcash governance.

ECC leadership accused the board of imposing employment and governance changes that made continued development impossible. They described the situation as a constructive discharge and said they would continue working on privacy technology outside the existing structure.

That news triggered a sharp sell-off. ZEC dropped more than 20% in days as investors feared a breakdown in protocol leadership.

Since then, Zcash stakeholders have worked to clarify that the blockchain itself remains decentralized and operational. 

Also, the team is restructuring as a startup to scale the network. Independent developers, node operators, and miners continue to run the network.

Meanwhile, the SEC’s decision removes the largest remaining regulatory threat facing the project.

Together, those developments appear to have shifted market sentiment.