Zcash, Artificial Intelligence, and the Growing Case for Financial Privacy

Table of Contents

• You might want to know
• Zcash and financial privacy in the age of AI
• Institutional crypto headlines
• Chart of the Week
• Key Insights Table
• Afterwards...

You might want to know

• How could artificial intelligence make old public blockchain transactions easier to connect to real people?
• Can Zcash offer financial privacy while still allowing users to share information selectively with regulators or business partners?

Zcash and financial privacy in the age of AI

Crypto Long & Short is a weekly newsletter offering insights, news, and analysis for professional investors. The newsletter is delivered every Wednesday. The views presented in this article belong to the author and do not necessarily represent CoinDesk, Inc., CoinDesk Indices, or their owners and affiliates.

This week’s feature examines the privacy challenge artificial intelligence poses for public blockchains and how Zcash approaches it. The analysis is by Michael Zhao of Grayscale Research. The edition also includes institutional headlines selected by Helene Braun and a weekly chart on ORE revenue and price performance.

Bitcoin demonstrated that people could transfer value without relying on a bank. Yet its public ledger comes with a lasting compromise: transactions can be viewed by anyone, and the record remains available indefinitely. Although wallet addresses are not automatically labeled with their owners’ real names, transaction histories can still reveal who sent funds, who received them, how much moved, and when. Zcash was designed around an alternative principle: digital money may need privacy as well as transparency.

For a long time, connecting a Bitcoin address to an individual required substantial effort. Investigators might need subpoenas, exchange records, or costly forensic services. Artificial intelligence is changing the economics of that task. AI systems can rapidly identify patterns across wallet activity, exchange accounts, data breaches, social media posts, and transaction timing. The technology does not necessarily have to break encryption or uncover a hidden code. It can instead analyze information that is already public, doing so more quickly and cheaply than a person could.

The permanence of blockchain records makes this development especially significant. A transaction made in 2019 could potentially be associated with an identity by software that did not exist until 2026. In other words, information that seemed difficult to interpret when it was first recorded may become easier to analyze later. The privacy implications of a public ledger can therefore grow over time, even if the ledger itself does not change.

Grayscale Research describes AI as contributing to a third wave of public concern about financial privacy. The first wave emerged in the 1970s, as financial records became digital. A second followed in the 1990s with the expansion of the internet. The current concern is developing as more real-world economic activity moves onto public blockchains, including stablecoin transfers, corporate payments, and trading. Businesses may not want competitors to see employee payrolls, supplier relationships, or other sensitive financial details.

Privacy is not the same as concealing wrongdoing or eliminating accountability. Rather, it concerns a person’s ability to decide who can access their financial information. Traditional banking offers a familiar comparison: a bank does not publish each customer’s balance for the world to see, even though financial institutions and authorities may have access to information under applicable rules. The policy question is how to preserve appropriate oversight while avoiding unnecessary public exposure.

Zcash was built to address this distinction. Launched in 2016 using Bitcoin’s code, it retains elements of Bitcoin’s basic design, including a 21-million-coin limit and a mining-based security model. Its additional feature is the option to make transactions private. In a shielded Zcash transaction, the network can verify that a payment is valid and that funds are not being spent twice without publicly disclosing the sender, recipient, or amount.

This approach also allows for selective disclosure. A user who needs to demonstrate transaction details to a regulator or business partner can share a special viewing key. The key can provide access to specified information without giving the other party control of the user’s funds. A full viewing key can disclose incoming transactions and the details of standard outgoing payments to the person or organization receiving it. This makes disclosure something the user can grant, rather than information that is necessarily exposed to everyone by default.

The underlying cryptographic idea predates Zcash. In an online post from 2010, Bitcoin’s creator, Satoshi Nakamoto, referred to this general kind of cryptography, while noting that they did not see how to apply it to Bitcoin at that time. Zcash later made privacy an optional part of its own network design.

Usage figures suggest that shielded transactions are not merely a theoretical feature. They have increased sharply over the past two years, while ordinary transparent transactions remained flat. About 4.9 million Zcash (ZEC), close to 29% of all coins ever mined, are now held in the shielded pool. The source also reports that ZEC’s price rose roughly 2,300% between September 2025 and September 2026. Grayscale launched a spot Zcash investment product on the NYSE in August 2026, which attracted nearly $1 billion in assets in just over a month.

Privacy may also benefit from broader participation. Each additional shielded transaction contributes to a shared pool of activity, making it more difficult to distinguish a particular user from others. That differs from many technology products, where a larger user base generally means more usage but does not necessarily strengthen protection for existing users. In a privacy system, a larger pool can make individual activity harder to isolate.

Because blockchain records cannot simply be unpublished, privacy is difficult to add after the fact. It needs to be considered in the system’s design from the beginning. Zcash continues to update its technology: the Ironwood upgrade, released in July 2026, replaced part of the system’s cryptographic engine and addressed a known security issue.

There are, however, important regulatory questions. The issue is not simply whether privacy is lawful. It is whether selective disclosure will meet the expectations of regulators accustomed to broad transaction visibility. The challenge may intensify as international anti-money-laundering rules and the European Union’s Markets in Crypto-Assets regulation (MiCA) encourage more automatic reporting. How policymakers and privacy-focused networks reconcile these priorities could influence whether such systems gain wider use in mainstream finance.

Bitcoin’s original model made public visibility central to its design. Zcash makes a different proposition: financial activity should be visible when a user chooses or when disclosure is required, but need not be exposed to everyone in every circumstance. After a decade of development, the question of whether financial privacy matters is increasingly relevant as AI and public ledgers make transaction histories easier to examine.

Institutional crypto headlines

Several major market, regulatory, and tokenization developments featured in the week’s institutional coverage. The U.S. Securities and Exchange Commission cleared the way for 3x leveraged bitcoin and ether exchange-traded funds. More than 60 U.S. stocks, including Nvidia and Tesla, moved closer to onchain trading. BlackRock described how tokenization might reshape investment portfolios, while a setback for the Clarity Act raised questions about regulatory uncertainty and crypto dealmaking.

• Leveraged bitcoin and ether ETFs: On Oct. 2, the SEC approved a Cboe BZX rule change permitting six ETFs issued by Volatility Shares. Each fund aims to deliver three times the daily return of its underlying asset.
• Tokenized U.S. stocks: More than 60 U.S. stocks, including Nvidia and Tesla, are planned for a 24/7 trading venue. The proposed system would use stablecoin trading and blockchain-based liquidity pools rather than a traditional order book.
• Tokenized portfolios: BlackRock’s discussion suggested that tokenization could extend beyond individual stocks and funds. A potential next step is portfolios that can be traded, rebalanced, and eventually managed in real time.
• Crypto dealmaking and the Clarity Act: Crypto mergers and acquisitions have reached record levels. The Act’s setback in the Senate leaves dealmakers assessing whether regulatory uncertainty could affect transactions, even as activity remains strong.

Chart of the Week: ORE revenue and price

ORE’s weekly protocol revenue recovered from a low of $319,000 in early April to $818,000 last week. Over the same period, the token’s price rose from about $39 to $111. Since January 2026, ORE has had roughly 1.5x the weekly beta of SOL. It has also outperformed SOL since October 2025, gaining +27% compared with SOL’s −39%. Revenue-funded buybacks may provide a potential cushion, though this remains an interpretation rather than a guarantee of future performance.

Key Insights Table

Afterwards...

The next phase of digital finance may depend on whether networks can balance privacy, verifiability, and regulatory access. AI makes the long-term consequences of public transaction records more consequential, while growing blockchain adoption places more commercial activity in view. Zcash’s model of shielded transactions and user-directed disclosure offers one possible response, but its wider acceptance will depend on technical security, practical usability, and how regulators interpret selective access.

The institutional headlines point to a broader shift: leveraged products, tokenized equities, and onchain portfolio management are expanding the range of financial activity that could move onto blockchain infrastructure. Whether those developments preserve meaningful privacy, and how oversight is implemented, will remain central questions for investors and policymakers.

Investment information: This information must be preceded or accompanied by a current Zcash ETF prospectus, which may be obtained by clicking here. Please read the prospectus carefully before investing. The Zcash ETF (“ZCSH” or the “Fund”), an exchange-traded product, is not registered under the Investment Company Act of 1940 (or the ’40 Act) and is therefore not subject to the same regulations and protections as 1940 Act-registered ETFs and mutual funds. An investment in ZCSH involves a high degree of risk and heightened volatility. ZCSH is not suitable for an investor who cannot afford the loss of the entire investment. An investment in the Fund is not a direct investment in ZEC.

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