Company: ZCSH
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0000950170-25-035469
Chunk: 44

Company: Grayscale Zcash Trust (ZEC)
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1
Chunk 44
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 Network is one of a number of projects intended to enhance blockchain technology. The Zcash Network’s primary enhancement of the blockchain was to add additional layers of privacy to traditional blockchain infrastructure so that users can make transactions that selectively disclose details related to those transactions. ZEC accomplishes this privacy preservation by using novel cryptographic protocols called Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (“zk-SNARKs”) to protect both the amount and the sender and recipient of the transaction. The result is a private transaction known as a “shielded” transaction, which is distinct from a public transaction on the Zcash Network, known as an “unshielded” transaction. From the inception of the Zcash Network through December 31, 2024, approximately 45% of Zcash transactions have been unshielded, 45% involved one party utilizing a shielded address, and 10% involved both parties utilizing a shielded address. ZEC’s primary advantage over other digital assets, its use in private on-chain transactions, has not been widely adopted even in the context of Zcash transactions. See “—Overview of the ZEC Industry and Market” for additional information on Zcash Network’s selective privacy-preserving features and recent upgrades.

As of December 31, 2024, the Trust holds approximately 2.4% of the ZEC in circulation. The size of the Trust’s position does not itself enable the Sponsor or the Trust to participate in or otherwise influence the development of the Zcash Network. As a decentralized digital asset network, the Zcash Network consists of several stakeholders, including core developers of ZEC, users, services, businesses, miners and other constituencies, of which the Trust is only one constituent. Furthermore, in contrast to other protocols in which token holders participate in the governance of the network, ownership of ZEC confers no such rights.

On January 11, 2019, the Trust changed its name from Zcash Investment Trust to Grayscale Zcash Trust (ZEC) by filing a Certificate of Amendment to the Certificate of Trust with the Delaware Secretary of State. The Trust issues common units of fractional undivided beneficial interest (“Shares”), which represent ownership in the Trust, on a periodic basis to certain “accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) in exchange for deposits of ZEC. The Shares are quoted on OTC Markets Group Inc.’s OTCQ