Zcash Foundation disowns ZRC-20 and CASH token

The Zcash Foundation has denied any connection to two third-party products, ZRC-20 and the CASH token, after a post published through its X account described them as additions to the Zcash network.

Summary

• The Zcash Foundation says ZRC-20 and CASH have no official connection to the organization.
• ZRC-20's draft specification relies on shielded memos and off-chain indexers.
• The proposed standard requires no Zcash protocol change or formal ZIP approval.
• U.S. investors must distinguish third-party tokens from products endorsed by a network's developers.

Zcash Foundation says it had no prior knowledge

The Zcash Foundation said in a statement that it had not known about the ZRC-20 project or the related CASH token before the matter emerged publicly. According to the organization, both products come from an independent third party and are not official parts of the Zcash protocol.

The clarification followed an X post published through the Foundation's account that announced a token standard for Zcash. The post said ZRC-20 would soon allow users to deploy, mint, and transfer tokens on the privacy-focused blockchain, with CASH presented as the first token using the system.

"Zcash now has a token standard," the post said before directing users to the project's website.

In its later response, however, the Foundation rejected any association with the products and urged users to conduct their own research before interacting with them. The statement identified ZRC-20 as a privately developed system rather than a feature created, approved, or operated by the nonprofit.

No public explanation has established how promotional material for an unrelated project appeared through the Foundation's account. Without confirmation from the organization, the incident cannot be described as an account compromise or hack.

Public information about the team operating ZRC-20 also remains limited. The project has released technical documentation and promotional pages, but the reviewed material does not clearly identify a company, legal entity, or group of named developers responsible for the system.

ZRC-20 uses Zcash memos without changing its protocol

According to the project's technical documentation, ZRC-20 is a draft fungible-token specification that stores JSON instructions inside encrypted memo fields attached to shielded Zcash outputs. Independent indexers would read the instructions in block order and calculate token balances outside the Zcash consensus system.

The documents describe three operations: deploy, mint, and transfer. A deployment would create a ticker and set its maximum supply, minting would issue units up to that limit, and transfers would move balances between accounts recognized by the indexer.

ZRC-20 borrows its basic structure from Bitcoin's BRC-20 format, but the proposed data carrier differs. BRC-20 records token instructions through Bitcoin inscriptions, while the ZRC-20 draft would place them in the 512-byte memo field available in shielded Zcash outputs.

The specification states that ZRC-20 is not a consensus change and does not require smart contracts. Zcash nodes would neither validate nor reject its token instructions because the indexer, rather than the blockchain protocol, would maintain the balance sheet.

As a result, Zcash consensus would only confirm the underlying transactions. Recognition of CASH balances would depend on software following the third party's indexing and validation rules.

The project also would not provide automatic privacy for publicly traded tokens. According to its documentation, an indexer needs access to the memos before it can calculate balances. One proposed design sends operations to a common protocol address and publishes its incoming viewing key, allowing indexers to decrypt the token instructions even though other parts of the transaction remain shielded.

Ownership would rely on signatures embedded in each payload because a Zcash shielded address does not publicly reveal who created an output. The draft proposes separate account identifiers and Ed25519 signatures to authorize minting and transfers at the indexing layer.

Several features remain unresolved. The documentation lists atomic trading, payloads exceeding 512 bytes, structured memos, and possible naming conflicts among its open questions. Early exchanges would also need to be custodial because the draft does not contain an atomic trading method comparable with tools used by some Bitcoin markets.

Official Zcash changes follow a separate process

The official Zcash Improvement Proposal system provides the established route for proposing protocol features, publishing implementation details, gathering community feedback, and recording design decisions. ZRC-20 does not appear as an adopted protocol feature under that process.

A third-party application can use Zcash transactions without gaining approval from the Foundation or becoming part of the network's consensus rules. The Foundation's statement makes that distinction central to the dispute: ZRC-20 may attempt to build on Zcash infrastructure, but its use of the blockchain does not make it an official Zcash token standard.

The name carries another source of possible confusion. ZetaChain already uses ZRC-20 for its omnichain fungible-token format, while members of the Zcash community discussed the same label years earlier when considering how token functionality could increase activity involving ZEC.

Recent Zcash development has instead centered on formal network changes. Planned NU7 proposals have included reducing the block target from 75 seconds to 25 seconds while adjusting block rewards to retain the existing issuance schedule. Unlike the independent token system, such protocol changes require coordination among network developers, node operators and other participants.

U.S. token buyers face separate issuer questions

For U.S. users, a third party's use of an established blockchain does not settle how regulators may treat its token offering or sale. The legal assessment can depend on how the asset is issued, marketed and sold, rather than whether the underlying network's foundation endorsed it.

In August, the U.S. Securities and Exchange Commission proposed crypto-asset rules covering certain investment contracts involving digital assets. The proposal included possible exemptions for offerings of up to $5 million over four years and up to $75 million during a 12-month period, subject to the proposed conditions.

The SEC proposal does not classify CASH or determine its status under U.S. law. It does, however, make the identity of a token's operator, the terms of its distribution, and the claims made to purchasers relevant details for American participants reviewing a new launch.

The Foundation's warning also arrived while ZEC was experiencing large price swings. As crypto.news reported on Sep. 7, ZEC gained about 43% during the first week of September and traded near $1,197 after breaking above $1,000.

By Sep. 14, the privacy coin had retreated toward $1,139 after touching a multi-year high near $1,290. Futures open interest fell by about 20% over 24 hours during the pullback, while roughly $17.2 million in long positions were liquidated.

ZEC then rose more than 20% to approximately $1,337 on Sep. 16, having reached an intraday high near $1,385. The move followed renewed attention on the NU7 vote and came as traders monitored resistance around $1,375 and $1,500.