Grayscale is moving forward with plans to convert its long-running Zcash Trust into a spot exchange-traded fund (ETF), filing its fifth amendment with the U.S. Securities and Exchange Commission on Friday, August 21. The proposed product would be the first spot ETF in the United States to directly track Zcash, a privacy-focused cryptocurrency created in 2016.

What Is Grayscale's Zcash ETF Filing?

Grayscale's latest amendment reveals key operational details about the planned fund. The trust would be renamed "The Zcash ETF" and would list on NYSE Arca, Inc. under the ticker symbol ZCH. The Bank of New York Mellon would serve as the transfer agent, while Coinbase Custody Trust Company, LLC would hold the fund's assets as custodian.

The sponsor fee is set at an annual rate of 2.5%, according to the filing. Grayscale stated that "the Trust intends to issue Shares on a continuous basis and is registering an indeterminate number of Shares," meaning shares would be sold to the public at varying prices based on the price of Zcash and the trading price of shares on NYSE Arca.

Grayscale

In an earlier amendment filed earlier that same week, Grayscale noted that a Digital Currency Group subsidiary was in discussions to potentially contribute approximately 200,000 ZEC (Zcash tokens) to the fund. Grayscale's existing Zcash Trust, which has been operating since 2017, currently holds over $260 million in assets under management.

Why Does This Matter for the Crypto ETF Landscape?

Grayscale has already established itself as a major player in crypto ETFs, having launched more than a dozen products tracking assets including Bitcoin, Ethereum, Dogecoin, and XRP. However, a Zcash spot ETF would represent a significant expansion into privacy-focused cryptocurrencies, a segment that has historically faced regulatory scrutiny in the United States.

Zcash ranks as the 12th-largest cryptocurrency by market capitalization, according to data tracked by The Block. The asset's focus on privacy features, which allow users to shield transaction details, has made it a unique case study for how U.S. regulators approach privacy coins in the ETF space.

"Looks like they're getting closer and closer to converting this thing into an ETF," said James Seyffart, Bloomberg Intelligence ETF Analyst, in a post on X following the filing.

James Seyffart, ETF Analyst at Bloomberg Intelligence

Steps to Understanding the ETF Approval Process

• SEC Filing: Grayscale submits amendments to its ETF proposal, with each iteration addressing regulatory feedback and clarifying operational details like fees, custody arrangements, and fund structure.
• Regulatory Review: The Securities and Exchange Commission evaluates whether the proposed fund meets standards for investor protection, market surveillance, and compliance with securities laws before granting approval.
• Listing Preparation: Once approved, the fund prepares to list on a stock exchange like NYSE Arca, establishing trading infrastructure and coordinating with custodians and transfer agents to manage shareholder accounts.
• Public Launch: The ETF becomes available to retail and institutional investors, who can buy and sell shares throughout the trading day at market prices determined by supply and demand.

The progression of Grayscale's amendments suggests the company is systematically addressing SEC requirements. The fifth amendment represents incremental progress toward what would be a landmark approval, as no U.S. spot ETF for Zcash currently exists. If approved, the product would open Zcash exposure to a broader institutional and retail investor base through traditional brokerage accounts.

The timing of these filings also reflects broader momentum in the crypto ETF market. Over the past year, regulators have become more receptive to approving spot ETFs for major cryptocurrencies, though privacy coins remain a more complex regulatory category due to concerns about illicit activity and financial surveillance.