Grayscale Applies to Convert Zcash Trust Into Spot ETF

Key Takeaways:

• Grayscale is seeking SEC approval to convert its Zcash Trust into a spot ZEC ETF.
• The trust holds about $150M in ZEC, which would transfer into the ETF structure if approved.
• The filing uses Form S-3, the same streamlined method Grayscale used for its Bitcoin and Ethereum ETF conversions.

The asset manager has filed a Form S-3 with the U.S. Securities and Exchange Commission in an effort to repackage its Zcash Trust into an exchange-traded fund backed by physical ZEC holdings.

A familiar playbook from Grayscale

The ETF effort is not starting from zero. Grayscale already demonstrated that a crypto trust can be transformed into an ETF when it converted its Bitcoin and Ethereum products last year. The firm is leaning on the same route again — including the S-3 shortcut that is available only to large issuers with long regulatory histories — rather than pursuing a lengthier registration process.

In parallel, a 19b-4 rule change request is also under review. If accepted, NYSE Arca would be allowed to list and trade the fund immediately.

A $150M trust waiting to be transformed

The current Zcash Trust controls roughly $150 million worth of ZEC, all of which would migrate directly into the ETF structure if the SEC gives the green light.
Share creation and redemption in-kind using baskets of ZEC — rather than only cash — are included, matching the structure of recently approved U.S. spot crypto ETFs.

The proposed product would track the CoinDesk Zcash Price Index and maintain a 2.5% sponsor fee.

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The timing of the filing isn’t accidental. ZEC has been receiving renewed attention since Reliance Group moved its entire crypto portfolio into the token, sparking fresh institutional curiosity around privacy-tech blockchains. Pricing has reflected that interest: Zcash is trading near $505, after reaching the top 15 cryptocurrencies by market cap.

But privacy brings scrutiny

The same technology that appeals to users also ensures regulatory questions will follow.

Zcash’s zero-knowledge proofs allow addresses and transaction information to remain private — a feature regulators have long treated differently from transparent cryptocurrencies like Bitcoin.

Grayscale’s filing highlights two concerns that could influence investor risk-reward calculations:

• privacy-centric designs attract tighter compliance oversight, and
• lower liquidity compared to large-cap assets means smaller trades can trigger outsized price movements.

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