Grayscale updates Zcash ETF filing as DCG unit weighs $110M ZEC buy

Grayscale has filed its fourth amendment to convert the Zcash Trust into an exchange-traded fund while disclosing that a Digital Currency Group subsidiary is considering an investment representing about 200,000 ZEC, currently worth roughly $110 million.

According to an Aug. 18 registration statement filed with the U.S. Securities and Exchange Commission, Grayscale plans to list shares of the converted trust on NYSE Arca under the existing ZCSH ticker, subject to the registration becoming effective.

The latest amendment also identifies DCG International Investments Ltd., a subsidiary of Grayscale parent Digital Currency Group, as a potential investor. The company is discussing a purchase of shares representing exposure to approximately 200,000 ZEC.

With Zcash trading near $555, the proposed amount would be valued at roughly $111 million. Grayscale stressed that no binding purchase agreement has been reached and that the eventual transaction, if one takes place, could differ substantially from the amount under discussion.

“However, because these discussions are not binding agreements or commitments to purchase, the Potential Investor could determine to purchase more, fewer or no Shares,” the filing said.

Grayscale Zcash ETF would convert an existing investment product

The amendment moves forward a conversion process built around Grayscale’s existing Zcash investment vehicle, which has provided investors with ZEC exposure without requiring them to hold the cryptocurrency directly.

Grayscale filed for the conversion in May, proposing to move ZCSH from its existing over-the-counter structure to NYSE Arca. The trust would continue holding ZEC while its publicly traded shares would provide investors with exposure to the value of the underlying cryptocurrency.

A subsequent crypto.news review of the filing found that the trust held 391,103.89 ZEC worth about $99.4 million as of March 31. Coinbase Custody was listed as custodian, BNY Mellon as administrator and the CoinDesk Zcash Price Index as the pricing benchmark.

The latest SEC filing shows that the trust’s principal market net asset value had increased to about $155.25 million as of June 30, with a principal market NAV per share of $32.15.

Under the proposed ETF structure, authorized participants would be able to purchase and redeem shares in blocks of 10,000 shares, which Grayscale defines as baskets. The trust intends to issue shares continuously once the registration becomes effective and the NYSE Arca listing is completed.

Grayscale’s filing states that the investment objective remains for the value of ZCSH shares, based on ZEC held per share, to track the value of the trust’s cryptocurrency holdings after expenses and liabilities.

The possible DCG International Investments purchase could add a sizeable investor to the product, although Grayscale has not provided a timetable for the discussions or stated whether the subsidiary has committed capital to the transaction.

Zcash ETF filing now includes the Orchard vulnerability

Alongside the investment disclosure, Grayscale has expanded the registration statement to account for the security incident that affected Zcash earlier this year.

The issue centred on a vulnerability in Orchard, Zcash’s shielded transaction pool, which could have allowed an attacker to create counterfeit ZEC without leaving an obvious public record of the additional supply.

Developers deployed emergency network changes in June after the flaw was discovered. Although the Zcash team said it found no evidence that the vulnerability had been exploited, the privacy properties of Orchard meant developers could not conclusively prove that counterfeit ZEC had never been created.

The uncertainty became particularly important for an investment product designed to hold ZEC because any hidden inflation could affect the cryptocurrency’s circulating supply and, in turn, the value of assets held by the trust.

Zcash developers later prepared the Ironwood upgrade to deal with the remaining supply question. As reported ahead of activation, Ironwood was scheduled for July 28 at block 3,428,143 and introduced a separately tracked shielded pool alongside controls governing funds leaving the old Orchard pool.

The upgrade included a supply turnstile designed to prevent more ZEC from leaving Orchard than had legitimately entered it. The mechanism did not identify individual counterfeit coins but provided a way to contain any excess hidden supply if the earlier vulnerability had been exploited.

Zcash founder Zooko Wilcox also explained before the fork that the old Orchard pool would effectively be sealed, while funds could leave through the turnstile under the network’s accounting rules.

When Ironwood activated on July 28, Zcash replaced the vulnerable pool with a new shielded pool backed by a formally verified design. Orchard stopped accepting new shielded transfers and remained available for withdrawals as users began moving funds into Ironwood.

More than 40,000 ZEC had moved into the new pool shortly after activation, while about 3.6 million ZEC remained in Orchard, according to data cited at the time.

ZEC recovered as Ironwood addressed supply concerns

The Orchard vulnerability had already produced a sharp market reaction before the latest ETF amendment.

ZEC came under pressure after the flaw became public in June because its shielded design prevented developers from definitively ruling out hidden inflation. Dragonfly managing partner Haseeb Qureshi said at the time that his firm continued to hold ZEC, while cryptographer Wei Dai argued that a sophisticated attacker could potentially have kept counterfeit coins inside the shielded system and moved them gradually.

By July, attention had moved toward Ironwood and its attempt to contain the supply risk. ZEC climbed above $500 on July 10 as futures open interest reached about $1.02 billion and traders positioned ahead of the network upgrade.

Market conditions remained volatile before activation. ZEC later moved back toward the $500 level as leveraged liquidations increased and traders waited for the fork, with the token testing that psychological support four days before Ironwood went live.

ZEC is now trading near $555 and has gained almost 10% over the past 24 hours. At that level, the cryptocurrency carries a market capitalization of approximately $9.4 billion.

Trading in the existing ZCSH investment product has not returned to its late-2025 peak. According to The Block’s data dashboard, volume climbed above $23 million in November 2025 but has remained below $5 million since June.

Grayscale still has several altcoin funds in the SEC pipeline

Grayscale’s fourth Zcash amendment comes as the asset manager continues to reorganize its altcoin exchange-traded product lineup.

On Aug. 7, the company withdrew registration statements for proposed Cardano, Hedera and Polkadot ETFs. The three Form RW filings were submitted within 190 seconds of each other, with Grayscale stating that none of the registrations had become effective and no securities had been issued or sold.

As reported after the withdrawals, SEC records still showed preliminary Grayscale registrations for Zcash, Bittensor, Aave, BNB and NEAR at different stages. Zcash had received its third amendment on July 31 before the latest fourth amendment was submitted on Aug. 18.

Other Grayscale altcoin products have already reached the market. The Grayscale Avalanche Staking ETF began trading in March after the SEC declared its registration effective, launching with approximately $5.55 million in assets under management.

Grayscale also moved its Hyperliquid product through several SEC amendments earlier this year. By May, the proposed GHYP fund had reached its third amendment as the asset manager worked toward an exchange-listed product tied to HYPE.

The SEC later declared the Grayscale Hyperliquid Staking ETF registration effective on June 2, while the Zcash registration has remained at the amendment stage following Grayscale’s latest Aug. 18 submission.