Grayscale Files for Biweekly Payout Zcash Options Income ETF

Grayscale Investments is pushing deeper into the Zcash market, filing paperwork for an options-based fund that would distribute income to shareholders every two weeks. The proposed ZCSH High Income ETF, submitted to the U.S. Securities and Exchange Commission, would not hold the privacy-focused cryptocurrency directly. Instead, it would generate returns by trading options tied to Grayscale's existing spot Zcash fund.

The filing arrived just 16 days after the asset manager proposed a leveraged 2x Zcash ETF on September 9, and less than three weeks after options on its spot ZCSH fund began trading on September 8. The rapid sequence of product launches underscores how quickly Grayscale is building out a suite of Zcash-linked investment vehicles around a spot fund that only started trading on NYSE Arca in late August.

At the core of the proposed fund is a synthetic covered call strategy. According to the SEC filing, the fund would buy calls and sell puts on ZCSH to track the underlying fund's price, then sell call options with terms generally lasting a month or less. The premiums collected from those option sales would fund shareholder distributions. At least 80% of the fund's net assets would be allocated to options tied to a Zcash exchange-traded product.