Zcash Foundation Cleared as SEC Drops Enforcement Threat

The Zcash ecosystem received a major regulatory boost this week after U.S. regulators confirmed they would not pursue enforcement action against the nonprofit organization stewarding the network.

SEC Concludes Review With No Action

The U.S. Securities and Exchange Commission (SEC) has formally concluded its review of the Zcash Foundation, informing the public charity that it does not intend to bring enforcement actions or charges related to its crypto offerings. The decision follows a lengthy review process that began with a subpoena issued on August 31, 2023.

The Foundation said the outcome reflects its commitment to transparency and compliance, particularly as regulators globally continue to scrutinize digital assets. The SEC’s inquiry focused on issues tied to anti-money laundering rules, economic sanctions, and securities law, areas that have posed persistent challenges for privacy-focused crypto projects.

Market Reacts as ZEC Surges

News of the SEC’s decision triggered a swift market response. Zcash (ZEC) jumped 12% within 24 hours, climbing to around $437. On-chain data shows the asset has nearly doubled over the past three months, outperforming much of the broader crypto market despite a pullback across digital assets in October.

Investors interpreted the regulatory clarity as a meaningful de-risking event, particularly for a project long viewed as vulnerable due to its emphasis on transaction privacy.

Infrastructure Upgrade Strengthens the Network

The regulatory news coincided with a major technical upgrade. The Zcash Foundation announced the deployment of five new DNS seeders across South Carolina, Oregon, Belgium, Germany, and Finland, expanding the network’s global infrastructure. These additions bring the total number of ZF-operated seeders to six, alongside an existing node in Iowa.

DNS seeders play a critical role by helping new nodes establish their first connections, ensuring faster wallet startup times and smoother transaction propagation. The expansion comes after DNS seeders operated by Electric Coin Company (ECC) stopped responding on January 8, creating slower-than-normal bootstrapping for new users.

Improving Reliability After ECC Outages

The Foundation explained that ECC-operated seeders going offline temporarily reduced available infrastructure, making the network more reliant on fewer connection points. By spreading DNS seeders across multiple geographic regions, ZF aims to eliminate single points of failure and ensure that wallets and nodes can always discover peers, even during outages.

According to the Foundation, the upgrade will boost reliability and performance, particularly during periods of network stress. ZF also confirmed that Shielded Labs is preparing to deploy additional seeders, and that further geographic expansion is under consideration.

Reaffirming Decentralization and Privacy

Following recent resignations at ECC, the Zcash Foundation reiterated its focus on advancing privacy-preserving financial infrastructure for the public good. The organization emphasized that no single entity controls Zcash, pointing to its open-source codebase and globally distributed node operators.

ZF stressed that Zcash’s consensus rules are enforced independently, ensuring that organizational changes do not threaten the network’s continuity. “The network continues to operate normally” the Foundation said, producing blocks, settling transactions, and keeping user funds and privacy secure.

Long-Term Vision Remains Intact

Looking ahead, the Foundation said it remains focused on maintaining and funding independent research and engineering, supporting decentralized governance, and advocating for privacy-preserving technology. While ecosystem transitions can create uncertainty, ZF urged users to separate organizational shifts from network health.

With regulatory pressure easing and infrastructure strengthening, the Zcash Foundation says its long-term mission is unchanged: to act in the best interests of the network and community, guided by transparency, collaboration, and a shared commitment to financial privacy.