Grayscale Files Zcash ETF With Biweekly Payouts
Grayscale is using options on its existing Zcash fund to make the new ZCSH product pay out twice a month. The filing with the SEC fits into the rise of crypto income funds alongside spot ETFs.
Key Takeaways
- Grayscale has filed with the SEC for a Zcash ETF with biweekly payouts.
- The fund does not hold Zcash, but uses options on Grayscale’s existing Zcash fund.
- The strategy can generate income, but it also limits gains during sharp price rallies and fully carries downside losses.
Grayscale has filed an application with the U.S. SEC for a Zcash ETF that pays out every two weeks. The payout does not come from holding Zcash itself, but from a strategy using options on Grayscale’s existing Zcash fund.
How the Fund Works
The proposed ZCSH High Income ETF does not hold Zcash (ZEC). Instead, it trades options tied to ZCSH, Grayscale’s existing spot fund. According to the filing, the fund uses a mix of bought call options and sold put options to track ZCSH’s price moves.
On top of that, the fund sells short-dated calls, usually with a maturity of one month or less. The premiums collected are meant to fund payouts to investors. Grayscale does note that the “high income” label does not guarantee a fixed return. So part of the payout could simply be a return of investors’ own capital.
What Investors Give Up
The trade-off is clear. If ZEC rises sharply above the chosen strike price, the fund misses out on that extra gain. If the price falls, the fund still takes that full drop.
That risk is playing out in a market that is still just getting started. ZCSH started trading on August 25 and the options followed on September 8. So the options market around this product is still young, which makes pricing and liquidity especially important for investors looking at this kind of income product.
Why This Matters
For European crypto followers, this filing shows how fast crypto ETFs are evolving from pure price exposure into income products. These funds can be interesting for investors looking for regular payouts, but they work differently from a standard spot ETF. Grayscale also points out that the new structure could create a conflict of interest, since an affiliated party already earns money from ZCSH and could indirectly benefit from extra demand for that fund.
The filing comes at a time when ZCSH has already attracted a lot of capital. The fund grew out of a Grayscale trust from 2017 and, according to the filing, already had hundreds of millions of dollars in assets by the end of September. That fits into a broader trend, with similar covered-call and premium income products also appearing around Bitcoin. Even with Grayscale’s earlier move on Zcash, it was already clear how quickly speculation around the fund can push the market.
