Crypto Long & Short: Zcash and the case for privacy in the age of AI

Happy Wednesday,

This is your institutional newsletter, Crypto Long & Short. This week:

• Michael Zhao of Grayscale Research on the privacy problem AI created for public blockchains, and how Zcash addresses it
• Top headlines institutions should pay attention to by Helene Braun
• “ORE Weekly Revenue Picks Up as Price Responds” in Chart of the Week

Thanks for joining us!

– Kim Klemballa

– by Michael Zhao, Grayscale Research

Bitcoin proved you don’t need a bank to move money. But it made a trade-off: every transaction is public, forever. Anyone can see who paid whom, how much and when. Wallet addresses aren’t tied to real names by default, but the payment history itself is never hidden. Zcash was built to close that gap — a cryptocurrency designed around the idea that privacy, not transparency, is what the next generation of digital money needs.

For years, Bitcoin’s openness didn’t matter much in practice, because turning a wallet address into a real person’s name took real work — subpoenas, exchange records or expensive forensics firms.

That’s changing fast. AI is incredibly good at exactly the kind of messy pattern-matching this work requires: linking wallets to exchange accounts, data leaks, social media and timing patterns. And because the blockchain never forgets, this cuts backward in time too: a transaction from 2019 can be unmasked by software that didn’t exist until 2026. AI doesn’t need to crack any codes; it just needs to read public data faster and cheaper than a human ever could.

Grayscale Research argues that AI is driving a third wave of public concern about financial privacy. The first came in the 1970s as financial records went digital, and the second in the 1990s with the rise of the internet. As more real-world finance moves onto public blockchains, whether that’s stablecoins, company payments or trading activity, the concern will only get more acute. Few businesses want their payroll or supplier list visible to competitors. This isn’t about hiding wrongdoing; it’s the same reason why your bank doesn’t publish your balance to the world. Privacy means choosing who gets to see your financial information, not eliminating oversight altogether.

This is the gap Zcash was built to fill

Launched in 2016 using Bitcoin’s own code, Zcash keeps Bitcoin’s core design — the 21-million-coin limit, the same mining-based security model — but adds something Bitcoin doesn’t have: an option to make transactions private. In a “shielded” Zcash transaction, the network can still confirm that the payment is legitimate (no fraud, no double-spending) without revealing who sent it, who received it or how much was sent.

If someone needs to prove something to a regulator or business partner, they can share a special “viewing key” that unlocks just that information, without handing over control of their money. A full viewing key can reveal incoming transactions and the details of standard outgoing payments to whomever it’s shared with. Disclosure becomes something the user grants selectively rather than something the network forces on everyone by default.

Interestingly, the idea predates Zcash by years. Bitcoin’s own creator, Satoshi Nakamoto, mentioned this style of cryptography in a 2010 online post, though they admitted they didn’t see how to apply it to Bitcoin at the time.

The numbers suggest people are actually using this feature, not just holding the coin. Shielded transactions have grown sharply over the past two years, even as ordinary transparent transactions stayed flat. Around 4.9 million Zcash (ZEC) — close to 29% of all coins ever mined — now sit in the shielded pool. Meanwhile, 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, and it attracted nearly $1 billion in assets in just over a month.

Privacy also gets stronger as more people use it: every new shielded transaction adds to a shared pool of activity that makes it harder to single out any one person. That’s different from a lot of tech features — usually more users just means more traffic, not better protection for everyone already there. And because you can’t “un-publish” a blockchain, privacy has to be built in from the start; it can’t easily be bolted on later. Zcash keeps refining its design — an upgrade called Ironwood, released in July 2026, replaced part of the system’s cryptographic engine and fixed a known security issue.

Worth noting: Zcash’s privacy tools raise a real regulatory question — not whether privacy itself is illegal, but whether the selective-disclosure system it offers will satisfy regulators used to full transaction visibility. That question gets harder as global anti-money-laundering rules and the European Union’s Markets in Crypto-Assets regulation (MiCA) push toward more automatic reporting, not less. How that tension resolves will likely shape how far this technology can go in mainstream finance.

If Bitcoin’s founding idea was “everything is visible, and that’s the point,” Zcash’s bet is that the next stage of digital money will be built around choice: visible when you want it to be, private when it needs to be. Zcash has been building toward that answer for a decade, while the rest of the market argued about whether the question mattered. It does.

– By Helene Braun

Several of crypto’s biggest market, regulatory and tokenization stories converged this past week as the SEC cleared the way for 3x leveraged bitcoin BTC$83,372.50 and ether ETH$2,567.45 ETFs, more than 60 U.S. stocks including Nvidia and Tesla moved closer to trading onchain, BlackRock outlined how tokenization could reshape entire investment portfolios and the Clarity Act’s setback tested whether regulatory uncertainty will slow record crypto dealmaking.

• SEC approves a 3x fix for bitcoin and ether traders who miss the wild swings: On Oct. 2, the agency approved a Cboe BZX rule change to allow six ETFs issued by Volatility Shares, each aiming to deliver three times the daily return of the underlying asset.
• More than 60 U.S. stocks including Nvidia and Tesla are headed onchain. Here’s how it works: The planned 24/7 venue will offer dozens of tokenized U.S. stocks, with trades conducted against stablecoins through blockchain-based liquidity pools rather than a traditional order book.
• BlackRock offers a glimpse of how tokenization may change your investment portfolio: Tokenization is not just about putting individual stocks and funds onchain. The next step could be entire investment portfolios that can be traded, rebalanced and eventually managed in real time.
• The Clarity Act stalled. Bankers aren’t hitting the brakes yet on crypto dealmaking: Crypto M&A has hit record levels, but the Clarity Act’s Senate setback leaves dealmakers weighing how much regulatory uncertainty still matters.

ORE weekly revenue picks up as price responds

ORE’s weekly protocol revenue has rebounded from a $319,000 low in early April to $818,000 last week, and the token has followed, up from about $39 to $111 over the same span. Since January 2026 it has had roughly 1.5x the weekly beta of SOL, and it has outperformed SOL since October 2025 (+27% versus −39%), with revenue-funded buybacks as a plausible cushion.

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