Grayscale’s Zcash ETF filing proposes a 2.5% fee and a potential 34% DCG stake

Grayscale’s proposed Zcash ETF would carry a 2.5% annual fee. Under one dated ownership calculation, a DCG affiliate could receive about 34% of the fund. If effective, the Aug. 21 SEC amendment would rename the existing trust “The Zcash ETF” and list it on NYSE Arca under ZCSH. The registration remains preliminary. The securities cannot yet be sold under it, and the SEC has neither approved nor disapproved them.

The ETF structure aims to fix the trust’s long-running price-tracking problem. To do that, large market intermediaries called authorized participants would create or redeem 10,000-share baskets when ZCSH’s market price moves away from the net value of the Zcash tokens, or ZEC, held by the fund. Grayscale expects that arbitrage to bring the two prices closer together.

The historical gaps were extreme. From Oct. 18, 2021, through June 30, 2026, ZCSH recorded a maximum 240% premium and a maximum 55% discount to net asset value. ZCSH’s average premium was 53%, and its average discount was 19%. The shares closed below NAV on 700 days. The filing placed the discount at 1% on Aug. 20, before the proposed ETF structure was operating.

Amendment No. 5 adds investor economics to the conversion’s market-structure case and its regulated-privacy question. The sponsor fee already applies to the trust. It accrues daily at 2.5% a year and is paid in ZEC. Over time, that reduces the tokens represented by each share. For up to 12 months after effectiveness, Grayscale intends to use all fees it receives for trust marketing and initiatives supporting Zcash development, marketing and education. The plan is voluntary, revocable and leaves the 2.5% fee intact.