Grayscale Files for ZCSH High Income ETF, an Options-Based Zcash Fund

Grayscale filed a registration statement with the U.S. Securities and Exchange Commission on September 25 to register the ZCSH High Income ETF, an actively managed fund designed to earn income by trading options on Zcash exchange-traded products rather than buying the privacy coin directly. In a post-effective amendment to its Form N-1A registration statement, Grayscale Funds Trust proposes that the filing take effect 75 days after submission, around early December, and the prospectus does not yet assign a ticker or an exchange.

A synthetic covered-call strategy on Zcash funds

The fund seeks current income while keeping prospects for capital appreciation through a synthetic covered-call strategy built on $ZEC exchange-traded products, primarily The Zcash ETF (ticker: ZCSH). The filing says the fund will invest at least 80% of its net assets, plus borrowings for investment purposes, in options contracts that use a Zcash exchange-traded product as the reference asset, valuing each derivative at its notional amount. It plans to write, or sell, call options to collect premiums, while pairing bought calls with sold puts to replicate the underlying fund’s price movements. The 80% policy is non-fundamental and can be changed with at least 60 days of written notice.

Indirect exposure, no direct $ZEC holdings

The prospectus is explicit that the fund will not invest in digital assets directly, will not hold $ZEC, and will not maintain a digital-asset wallet or control private keys. Because its exposure runs through derivatives, the fund cautions that it may not track the price of $ZEC. ZCSH, by contrast, is a grantor trust sponsored by an affiliate of the fund’s adviser for the sole purpose of holding $ZEC. The filing is the latest addition to Grayscale’s Zcash product line: the asset manager listed The Zcash ETF on NYSE Arca in August as the first U.S. spot exchange-traded fund holding a privacy coin, and options on the fund began trading in September.

What the filing leaves open

The registration resolves little about the fund’s final form. The prospectus lists no ticker or listing exchange, and it states that the SEC has not approved or disapproved the securities. If the filing becomes effective as proposed, the fund would give investors a way to seek income from $ZEC volatility without owning the token directly, through a series of Grayscale Funds Trust.