Grayscale files with SEC for ZCSH High Income ETF targeting biweekly payouts on Zcash

Grayscale Investments has filed a proposal with the US Securities and Exchange Commission for a new product called the ZCSH High Income ETF. The asset management firm, which specializes in cryptocurrency investment vehicles, designed this actively managed fund to deliver regular income through options written on Zcash exchange-traded products.

Fund Seeks to Provide Biweekly Income

The ZCSH High Income ETF aims to generate returns for investors by collecting option premiums. The fund’s approach is modeled on a covered-call strategy, using options contracts linked to Zcash financial instruments. Premiums generated from writing these options would be distributed to investors every two weeks.

According to the SEC filing, the new fund will not directly hold ZEC, Zcash’s native cryptocurrency, nor will it maintain a digital asset wallet or require management of private keys. Instead, the ETF will use options derived from Zcash ETPs, including Grayscale’s existing ZCSH ETF, to retain indirect exposure to ZEC’s price movements.

While this covered-call approach provides regular income, there is a trade-off. If Zcash’s price rises sharply beyond the options’ strike prices, potential gains would be capped, as the fund would be obligated to sell at the agreed price in the contract.

ZCSH High Income ETF plans biweekly distributions funded by options premiums, while preserving exposure to Zcash’s price trends via exchange-traded Zcash products.

Grayscale explained that the timing of the filing comes amid heightened demand for regulated Zcash investment products and a strong rally in ZEC’s price over recent weeks.

The existing ZCSH ETF, which launched earlier this year, has seen rapid asset growth. Its holdings recently surged to approximately $996 million, after crossing $500 million just a few weeks earlier. This jump is not solely a result of fresh investor inflows, but also reflects ZEC assets already held in the trust before its ETF conversion, as well as ZEC’s appreciation in value during September.

Grayscale Investments, established in 2013, is a leading digital currency asset manager known for bringing cryptocurrency exposure to institutional investors through regulated investment products.

The growth in ZCSH coincides with increasing institutional demand for Zcash exposure. Alongside Grayscale’s ZCSH, a European Zcash ETP has also expanded access for professional investors in international markets.

This trend highlights the growing interest among regulated fund managers in crypto income strategies, particularly those providing structured participation in digital asset price movements without direct custodianship of cryptocurrencies.

Mini dictionary: Covered-call strategy – An investment approach that involves holding a long position in a financial asset while simultaneously writing call options on the same asset to generate option premium income. This strategy generates returns in stable or modestly rising markets, but it can limit upside potential if the underlying asset price increases sharply.