Grayscale Proposes First US Spot ETF Linked to Privacy Coin

Grayscale Investments has made significant strides in the cryptocurrency market by submitting a proposal to convert its Zcash Trust into a spot ETF.

The proposed ETF would be the first US exchange-traded fund linked to a privacy coin, providing investors with a regulated vehicle to gain exposure to ZEC without dealing with wallets or exchanges. The ETF would track the CoinDesk Zcash Price Index and hold actual ZEC tokens.

Coinbase Custody is lined up as custodian and prime broker for the fund, while Bank of New York Mellon would serve as administrator.

One of the key motivations behind the conversion is structural. Closed-end trusts like Grayscale's Zcash product tend to trade at persistent discounts or premiums to their net asset value. An ETF structure allows authorized participants to create and redeem shares, which keeps the price tethered much more closely to the underlying asset.

The SEC recently closed a review focused on privacy coins without taking any enforcement actions. This development has created a favorable regulatory backdrop for Grayscale's proposal.