Grayscale Zcash ETF filing proposes 2.5% fee, 34% DCG stake

Grayscale's proposed Zcash ETF includes a 2.5% annual fee and a potential 34% stake for a DCG affiliate. The SEC amendment, if effective, would rename the existing trust to 'The Zcash ETF' and list it on NYSE Arca under ZCSH. The registration is preliminary, and the SEC has not yet approved or disapproved it. The ETF aims to address the trust's price-tracking issues by allowing authorized participants to create or redeem 10,000-share baskets when ZCSH's market price diverges from the net value of the Zcash tokens held. Historical data shows ZCSH experienced a maximum 240% premium and a maximum 55% discount to net asset value from Oct. 18, 2021, to June 30, 2026. The average premium was 53%, and the average discount was 19%. The filing indicates a 1% discount on Aug. 20, prior to the ETF structure. The sponsor fee, accruing daily at 2.5% and paid in ZEC, reduces the tokens represented by each share. Grayscale plans to use fees for marketing and Zcash development initiatives for up to 12 months after effectiveness. The filing warns that Digital Currency Group could own a majority stake, potentially controlling shareholder votes and creating conflicts. The trust had 4,829,300 shares outstanding, each representing about 0.0805 ZEC. The combined related-party holdings were classified as 757,202 shares, totaling about 44.3%. The basket process aims to maintain ZCSH's alignment with NAV, but factors like liquidity constraints and concentrated ownership could disrupt arbitrage.