Arthur Hayes Urges $ZEC Holders to Withdraw and Self-Custody Their Crypto Assets

Arthur Hayes, co-founder of BitMEX and chair of his family office Maelstrom, has issued a pointed warning to holders of Zcash (ZEC): withdraw your tokens from centralized exchanges and “shield” them in a self-custodial wallet if you want to protect your assets.

In a message posted on X (formerly Twitter), Hayes wrote:

“If you hold $ZEC on a CEX, withdraw it to a self-custodial wallet and shield it.”

His remarks come amid a sharp price decline in ZEC and heightened regulatory scrutiny of privacy-focused cryptocurrencies. Zcash surged to around $723 last Saturday, later fell to approximately $504 on Sunday, then rose again to ~$677 on Monday. At the time of his post, ZEC was trading near $450, about a 37 % decline from its weekend high.

Why Arthur Hayes Is Warning ZEC Holders to “Shield and Self-Custody”

Hayes’ warning draws attention to the difference between Zcash’s transparent use and its shielded transaction mode a feature that enables privacy via zk-SNARK technology and hides senders, receivers and amounts.

He specifically targeted users holding ZEC on centralized exchanges (CEXs), noting that most exchanges only support transparent (t-addresses), which means all transactions remain traceable on-chain. By contrast, shielded addresses (z-addresses) enable greater privacy but they require users to manage their own wallets and move funds off exchange custody.

Hayes argued that keeping ZEC on a CEX effectively nullifies the core privacy value-proposition of Zcash, leaving tokens vulnerable to exchange risks like withdrawal freezes, delistings, regulatory enforcement or insolvency. He positioned self-custody and shielded transfers as the path to true sovereignty.

What This Means for Zcash and Crypto Investors

Zcash privacy features highlighted: Hayes’ message underscores how Zcash’s shielded pool and self-custody wallets are central to its narrative as a privacy coin. The surge in ZEC’s price and market cap (exceeding $10 billion in recent days) is partly driven by growing interest in these features.
Increased regulatory pressure: Privacy coins like Zcash face intensified scrutiny from regulators in the U.S., Europe and Asia. For example, enforcement around mixers and AML compliance now puts privacy-enhancing transfers under closer watch.
Custody choice and control: Hayes’ warning emphasises the difference between passive holding on an exchange and active self-custody. While self-custody brings greater control, it also shifts responsibility for private-key security, backup and wallet management onto the user.
Market psychology and signals: When a high-profile crypto figure tells investors to “shield and self-custody $ZEC,” it may reflect concerns about exchange risk, future compliance actions or anticipated market disruptions all of which feed into investor behaviour and narrative construction.

Risks and Considerations

Self-custody is not risk-free: Users who move tokens into a self-custodial wallet must properly secure their keys, follow safe backup practices and remain vigilant against phishing or hardware-wallet compromise.
Liquidity and exchange access: Removing tokens from exchanges may reduce immediate access to liquidity. If a user needs to quickly sell ZEC, off-exchange funds may present friction.
Regulatory outcomes undefined: Hayes’ warning is proactive, but it does not guarantee a specific regulatory event or mandated exchange action. The call to “withdraw and shield” is a precaution, not a definitive prediction.
Volatility still high: Zcash remains volatile. While privacy features and institutional interest may support its long-term thesis, near-term price swings and technical risk persist.

FAQs

Q1. What did Arthur Hayes say about Zcash?
A1. Arthur Hayes advised Zcash (ZEC) holders to withdraw their tokens from centralized exchanges (CEXs) and move them into self-custodial wallets using Zcash’s shield-address feature in order to maintain privacy and reduce risk.

Q2. What does “shielded” mean in the context of Zcash?
A2. Zcash supports two types of addresses: transparent (t-addresses) and shielded (z-addresses). Shielded addresses use zk-SNARK cryptography to hide sender, receiver and amount, preserving privacy. Exchanging funds remains traceable if they reside on a CEX and use transparent addresses.

Q3. Why is self‐custody important for ZEC holders?
A3. Self-custody allows holders to manage their own private keys and use shielded addresses, maintaining the privacy features that define Zcash. By contrast, leaving ZEC on a CEX often means using transparent addresses and relying on the exchange’s custody infrastructure.

Q4. Are there regulatory risks associated with holding ZEC in shielded wallets?
A4. Yes. Privacy coins like Zcash face heightened regulatory scrutiny. Some jurisdictions are considering or enforcing stricter rules on anonymous transactions and wallet flows, which can increase compliance risk for users and platforms.

Q5. Should I move my ZEC to a shielded, self-custodial wallet immediately?
A5. This article provides information only and is not financial or legal advice. If you decide to move ZEC to a self-custodial, shielded wallet, make sure you understand how to securely manage private keys, support wallet backup, and are comfortable with self custody.