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Grayscale’s Zcash ETF Filing Reveals a 2.5% Fee—and a Potential 34% DCG Stake

By Isaac • August 22, 2026 11:34 pm • Comments

Grayscale’s latest Zcash filing puts two numbers in front of investors that deserve more attention than the proposed ETF label: a 2.5% annual fee and a potential related-party position that could equal roughly one-third of the enlarged fund.

The SEC filing says the existing trust would be renamed “The Zcash ETF” if the registration becomes effective and the shares are listed on NYSE Arca. The planned ticker remains ZCSH.

That is progress toward an exchange-traded structure, but it is not approval. The registration statement is still preliminary, and the filing itself says the securities cannot be sold until the registration becomes effective.

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The fifth amendment is the latest formal step in the proposed trust-to-ETF conversion:

The filing sets the sponsor fee at 2.5% per year. It accrues daily and is paid in ZEC, which means the amount of ZEC represented by each share gradually declines as the trust sells or transfers tokens to cover that expense.

That matters because the proposed product is designed to track the value of its ZEC holdings, less expenses and liabilities. A 2.5% annual fee is not a one-time charge.

It compounds as a continuing reduction in the crypto backing each share.

Grayscale also says it intends to direct the sponsor fees it receives during the first 12 months after effectiveness toward marketing the trust and supporting Zcash development, education and adoption initiatives. That commitment is voluntary and can be changed or ended.

It does not eliminate the fee paid by the fund.

The more unusual disclosure involves DCG International Investments, an indirect subsidiary of Digital Currency Group. The filing says the sponsor is in discussions over a possible contribution of approximately 200,000 ZEC in exchange for newly created shares.

The language is important: the discussions are nonbinding. The filing does not say the contribution has occurred, and it does not guarantee that it will.

The potential contribution appeared in the prior amendment and remains nonbinding:

The SEC quarterly report provides the dated baseline behind the concentration estimate. The trust had 4,829,300 shares outstanding at June 30, each representing about 0.0805 ZEC, while related parties already held 757,202 shares.

The OTCQX market price stood 17% below net asset value, a gap that illustrates why Grayscale wants an ETF-style creation and redemption process for public-market investors.

At that ratio, a 200,000-ZEC contribution would create roughly 2.49 million additional shares. But the report also shows why the calculation must remain a snapshot rather than a promised outcome: the trust was still operating without an ETF redemption mechanism, its shares could move independently from the underlying ZEC, and sponsor fees reduce the tokens represented by each share every day.

Later creations, redemptions, transfers, sales or purchases can change both the denominator and the related-party total before any proposed contribution closes.

CryptoSlate calculated that the potential investor would hold about 34% of the enlarged share count under that snapshot, assuming no other creations, redemptions or change in the ZEC-per-share ratio.

That 34% figure is therefore a scenario, not a fixed ownership result. The actual percentage would depend on the final contribution, the timing, the ZEC-per-share ratio and other share activity.

The conversion is intended to add continuous share creation and redemption through authorized participants. In a functioning ETF, that arbitrage mechanism can help pull the market price closer to the net asset value of the ZEC held by the fund.

That would address a long-running weakness in the trust structure. The filing notes that ZCSH has traded at both premiums and discounts to net asset value, including a 17% discount on June 30.

But a cleaner ETF mechanism does not erase concentration risk, fee drag or the volatility of ZEC itself. Coinbase Custody Trust Company would serve as custodian, while Coinbase would act as prime broker.

Investors would still own shares rather than ZEC they can withdraw or use on the network.

The filing makes the proposed structure more concrete. The real story is what investors would be paying, who could own a large block of the fund, and how much ZEC would remain behind each share over time.

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