Grayscale Investments has filed a Form S-3 with the SEC to convert its existing Zcash Trust into an ETF, which will trade on the NYSE Arca under the ticker ZCSH.
If approved, it would be the first US ETF linked to private equity funds.
What Grayscale offers
The company plans to turn its closed Zcash Trust, which manages $200 million in assets, into a trading fund that holds virtual ZEC tokens.
The ETF will track the CoinDesk Zcash Price Index, giving investors a controlled vehicle to gain exposure to ZEC without dealing with wallets, exchanges, or the worry of self-storage.
Coinbase Custody is lined up as the custodian and main broker of the fund. The Bank of New York Mellon will be the administrator.
One of the biggest factors in promoting conversions is engagement. Closed-loop trusts such as Grayscale’s Zcash exchange tend to trade at a constant discount or be paid for in full. An ETF system allows authorized participants to create and redeem shares, resulting in a price that is closely linked to the underlying asset.
Management has quietly changed
Recently, the SEC closed its review of private equity funds without taking any action. No lawsuits, no Wells notices, no hard-hitting publications. Just go out quietly.
Zcash itself has an interesting place among cryptocurrencies. Unlike Monero, which guarantees privacy for every transaction, Zcash gives users a choice between transparent and secure transactions.
The currency uses a cryptographic method called zk-SNARKs, which stands for zero information principles, which can confirm that transactions are legitimate without revealing the sender, receiver, or amount.
What does this mean for investors?
ZEC has been trading above $550 following the filing, with market watchers eyeing a possible move above $600 if the crypto’s growth materialises. Bitcoin has been trading above $80,800, giving a nice tail to the altcoins.
The risks are real, however. The SEC may still refuse to file or file an action that renders the product ineffective. And Zcash itself, although it is well established, has a smaller market and financial history than Bitcoin or Ethereum, which means that the ETF may face problems related to the legitimate activities of participants and the spread of businesses.
There is also a philosophical debate that will not end anytime soon. Private funds exist to reduce market visibility. The whole point of security management is to increase transparency. These two goals are not inherently mutually exclusive, and any adoption would require the SEC to clarify the distinction between financial privacy and audit obligations.
