Grayscale has filed its fifth amended registration statement with the U.S. Securities and Exchange Commission for a proposed spot Zcash ETF, advancing its plan to convert the existing Grayscale Zcash Trust into an exchange-traded fund that would directly hold Zcash’s ZEC token.
The proposed fund, to be called The Zcash ETF, is designed to list on NYSE Arca under the ticker ZCH, according to the amended registration statement filed Friday. If the conversion proceeds, it would create the first U.S.-listed ETF structure focused on spot exposure to ZEC, giving brokerage-account holders a route to trade shares tied to the cryptocurrency’s market price rather than shares in the current trust format.
Grayscale set the proposed sponsor fee at 2.5% annually, the filing shows. That is a comparatively high charge among U.S. spot cryptocurrency ETF products, where several large Bitcoin and Ethereum funds have competed on fees below 1%. The pricing places the proposed Zcash product closer to Grayscale’s older single-asset trust model, which has generally carried higher management fees than newer ETF offerings.
Trust conversion would reshape how zcash exposure trades
The registration statement says the trust expects to issue shares continuously and has registered an indeterminate number of shares. New shares would be sold at prices that reflect factors including ZEC’s price and the trading price of the ETF shares on NYSE Arca at the time of the sale.
That mechanism is central to the proposed change. A traditional trust can trade at a substantial premium or discount to the value of crypto it holds when share creation and redemption are limited. An ETF structure is intended to support an arbitrage process in which market participants can create or redeem shares as conditions allow, helping keep the share price closer to the value of the underlying assets.
Grayscale’s filing names Coinbase Custody Trust Company, LLC as custodian for the ZEC held by the trust. The Bank of New York Mellon would act as transfer agent, handling shareholder records and administrative functions associated with the fund.
The application does not itself establish a launch date. The proposed ETF would require the relevant regulatory and exchange processes to be completed before its shares could begin trading on NYSE Arca.
Grayscale’s trust already holds more than $260 million
The Zcash Trust has operated since 2017 and reported more than $260 million in assets under management as of Friday, according to the amended filing. That existing asset base gives the conversion proposal a different starting point from a new crypto ETF launch: it would seek to move an established pool of ZEC exposure into an exchange-traded wrapper rather than begin with an empty fund.
An earlier, fourth amended registration statement said a Digital Currency Group subsidiary was discussing a potential contribution of about 200,000 ZEC to the trust. Digital Currency Group is Grayscale’s parent company. The proposed contribution was described as under discussion in that earlier filing, rather than as a completed transaction.
The scale of the trust also means ZCH could become a meaningful listed vehicle for a cryptocurrency whose market is smaller and less liquid than Bitcoin or Ethereum. That can be useful for traders seeking regulated exchange access, but it also makes the fund’s creation activity, custody arrangements, and underlying-market liquidity more consequential than they would be for a much larger asset.
A privacy-focused asset faces a different etf test
Zcash launched in 2016 and uses cryptographic privacy technology that can allow transaction details to be shielded. Users can choose between transparent transactions, where transaction information is visible on the blockchain, and shielded transactions, which can conceal details such as amounts and addresses.
Those capabilities distinguish Zcash from the cryptoassets that have already reached the U.S. spot ETF market. They also create a more complex compliance backdrop. Privacy-enhancing cryptocurrencies have faced scrutiny from regulators and financial institutions because they can make blockchain activity harder to trace, even though Zcash includes transparent transaction options and its protocol does not require every transaction to use shielding.
Grayscale’s proposal would therefore test whether a U.S.-listed spot crypto fund can be structured around an asset with privacy features while relying on regulated service providers, a named custodian, and exchange-traded shares. The filing’s choice of Coinbase Custody and BNY Mellon reflects the operational framework the sponsor plans to use, though the fund’s eventual ability to attract sustained trading would depend on market-maker participation, liquidity in ZEC markets, and the final regulatory path.
Fee level could limit the product’s appeal
The 2.5% annual sponsor fee is likely to be among the first figures prospective traders weigh if ZCH reaches the market. On a $10,000 holding, a 2.5% fee would equate to roughly $250 annually before considering any movement in ZEC’s price. Fees are deducted from fund assets, which can gradually reduce the amount of underlying cryptocurrency represented by each share over time.
A higher fee may be easier to justify for a specialized product with fewer direct competitors, particularly one handling a privacy-oriented cryptocurrency. Yet it gives active market participants an incentive to compare the convenience of ETF shares with the cost of holding ZEC directly, where available, or through other regulated products.
The fifth amendment provides more detail on the planned structure, service providers, trading symbol, and fee schedule, but the outcome will depend on whether the proposed conversion clears the remaining steps needed for a NYSE Arca listing. If it does, ZCH would bring an established Zcash trust into the ETF market with a structure built to track spot ZEC more closely than a closed-end trust.
Curious how crypto ETFs work behind the scenes? Explore ETF basics before evaluating this Zcash proposal.
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