Grayscale Files to Convert Zcash Trust to ETF
Asset manager Grayscale filed a Form S-3 with the SEC Wednesday to convert its Grayscale Zcash Trust (ZCSH) into a spot ETF. If approved, the product would mark the first privacy-focused cryptocurrency ETF listed on a U.S. exchange.
The filing arrives as Zcash (ZEC) consolidates after a massive annual run. The token changed hands at $505 at press time, down 2.5% on the day but retaining a staggering 960% gain over the last 12 months.
The Arbitrage Play
The conversion bid offers a lifeline to ZCSH holders. The trust currently trades at a steep discount to the underlying assets it holds.
- Net Asset Value (NAV): ~$40.76 per share
- Market Price: ~$26.52 per share
A conversion to a spot ETF would force these prices to converge, instantly erasing the ~35% discount. This mirrors the mechanics of Grayscale’s successful GBTC conversion earlier this cycle.
The Regulatory Wall
Grayscale is testing the SEC’s tolerance for anonymity. Unlike Bitcoin or Ethereum, Zcash offers “shielded” transactions that obscure sender, receiver, and amount data.
Regulators globally have targeted privacy coins for anti-money laundering (AML) concerns. Major exchanges in Europe and Asia have previously delisted ZEC to comply with local laws. The SEC has yet to approve a fund for assets with built-in anonymity features.
“As privacy becomes foundational across crypto, we view ZEC as a key contributor to a well-balanced digital asset portfolio,” Grayscale posted on X.
Market Outlook
The filing kicks off a review period that could drag on for months. While the market reaction for ZEC was muted Wednesday, the 19b-4 filing starts the clock for the SEC to either reject the privacy model or open the door to a new asset class.
