Grayscale Applies to Convert Zcash Trust Into Spot ETF

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.

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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