Grayscale began trading on Tuesday for the first US spot ETF backed by Zcash (ZEC), with an annual fee of 2.5%, while ZEC was trading around $851, its highest level since 2018.
Key takeaways
Grayscale converted its Zcash Trust into an exchange-traded fund, listed on NYSE Arca under the ticker ZCSH.
The fund charges an annual fee of 2.5% for the benefit of the Zcash network.
ZEC erased the June drop and gained nearly 70% over the past week.
Grayscale’s Zcash ETF debuts on NYSE Arca
The fund was launched Tuesday morning on NYSE Arca under the ticker ZCSH, through the conversion of the existing Zcash Trust into a listed product accessible to traditional brokerage accounts. Grayscale presented it as the world’s first index product to hold ZEC directly, rather than replicating it via futures contracts or swaps. Launched in 2016, Zcash is capped at 21 million units and offers transfers optionally “shielded,” meaning encrypted.
Sponsorship fees amount to 2.5% per year, calculated day by day and taken in ZEC—an even higher level than that of most spot crypto ETFs in the United States today. According to a Grayscale spokesperson, the revenue will be paid back to the Zcash network to fund its promotion and development.
By Monday, the trust managed more than $313.5 million in assets. It had been listed on the OTCQX platform since October 2021, an over-the-counter market where the quoted price often diverged from the value of the underlying tokens. Coinbase Custody provides custody for the tokens, Bank of New York Mellon acts as transfer agent, while Jane Street Capital and Virtu Americas will handle the creation and redemption of shares.
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Steve Vanourny links financial confidentiality and artificial intelligence
For Steve Vanourny, head of indices at Grayscale, demand for genuine financial confidentiality can only grow as artificial intelligence transforms the ability to monitor cash-flow streams. He believes Zcash has a durable long-term role, and that the ETF wrapper offers investors a familiar vehicle to access it.
However, fees remain heavy: an investor who kept their holdings for ten years would give up nearly a quarter of their position to management costs alone. The question of governance also arises. A subsidiary of Digital Currency Group, the parent company of Grayscale, the firm is in non-binding discussions to contribute about 200,000 ZEC in exchange for shares, which would represent nearly 34% of the fund once expanded.
The Zcash rally coincides with the launch of ZCSH
Zcash was trading at around $851 on Tuesday, with a market capitalization of about $14.37 billion and a 24-hour futures trading volume of $9.54 billion. The token erased June’s drop and gained nearly 70% over a week.
Grayscale has already run this conversion scenario multiple times. The manager turned its Bitcoin (BTC) and Ethereum (ETH) trusts into ETFs, following a long judicial standoff with the Securities and Exchange Commission that concluded in its favor. Index products backed by XRP (XRP), Solana (SOL), and Litecoin (LTC) followed.
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