Regulatory Pivot: SEC Clears Zcash; Democrats Blast ‘Amnesty’ for Major Exchanges
Zcash surges to $427 as the SEC drops its investigation, sparking a Congressional inquiry into the agency’s dismissal of cases against Coinbase and Binance.
The U.S. Securities and Exchange Commission has formally closed its investigation into the privacy protocol Zcash (ZEC), concluding a two-year probe without recommending enforcement action. The decision sent ZEC climbing 3% to $427, cementing the asset’s status as a regulated commodity rather than a security.
This clearance marks the latest tangible outcome of the agency’s strategic pivot under Chair Paul Atkins. However, the move has ignited a firestorm on Capitol Hill.
The ‘Amnesty’ Backlash
Three senior House Democrats sent a blistering letter to Chair Atkins today, demanding justification for the “abrupt dismissal” of at least 12 major enforcement actions since January 2025. The lawmakers specifically flagged the dropped lawsuits against Binance, Coinbase, and Kraken. Cases where federal judges had previously ruled the SEC had plausible grounds to proceed.
The pullback overlaps with tens of millions of dollars in political spending by crypto firms tied to the administration.
The letter explicitly raises “pay-to-play” concerns, citing massive donations to the presidential inauguration fund by entities benefiting from the regulatory freeze. While the Justin Sun (Tron) case remains stayed rather than dismissed, the pattern suggests a systemic de-escalation of hostilities against established industry players.
Market Response
Traders largely ignored the political noise, focusing instead on the regulatory green light. Bitcoin (BTC) held firm at $95,600, maintaining a $3.32 trillion market cap. The Zcash ruling is particularly significant for institutional desks, which had largely avoided privacy coins due to compliance opacity. With the SEC investigation closed, liquidity providers may re-enter the ZEC market without fear of imminent securities litigation.
For the broader market, the signal is clear: The era of “regulation by enforcement” is effectively over, replaced by a regime of strategic leniency, provided the political friction doesn’t boil over into legislative gridlock.
