Grayscale has submitted paperwork with the US Securities and Exchange Commission (SEC) for a new exchange-traded fund designed to generate recurring cash distributions tied to Zcash without holding the privacy-focused cryptocurrency itself.
The proposed product, called The ZCSH High Income ETF, was filed on September 25, 2026, as a post-effective amendment to an existing registration statement for Grayscale Funds Trust.
The fund’s stated goal is to deliver current income while still offering some potential for price appreciation.
It would do so by trading options on Zcash exchange-traded products, most notably Grayscale’s existing spot vehicle that trades under the ticker ZCSH.
That spot fund listed on NYSE Arca in late August 2026, and listed options on it began trading only weeks later, on September 8.
Under the strategy outlined in the filing, the new ETF would generally obtain synthetic exposure by purchasing call options and selling put options on the reference Zcash product.
It would then sell additional short-dated call options, typically with expirations of one month or less, and use the premiums collected from those sales to support distributions.
At least 80 percent of net assets, plus any borrowings for investment purposes, would be allocated to options that use a Zcash ETP as the reference asset.
Distributions are planned on a biweekly schedule from net investment income, if any, with any realized capital gains distributed at least annually.
The documents make clear that the “high income” label does not guarantee a particular yield.
Some payouts could represent a return of capital rather than earnings generated by the strategy.
The structure carries well-known trade-offs associated with covered-call and related options overlays.
Selling calls can cap upside if the underlying Zcash product rallies through the strike prices.
At the same time, investors would retain substantial downside exposure if ZEC prices fall.
Because the fund would not hold Zcash directly, its performance may also diverge from the spot price of the token.
ZCSH itself has attracted notable inflows since listing, with assets reported near $914.5 million as of mid-September.
The income fund would sit in the same family and could, the filing notes, increase trading activity in the spot product.
An affiliate of the adviser sponsors that spot ETF and collects its management fee, creating a potential conflict that the registration statement discloses.
The registration statement has not yet become effective. Shares cannot be offered or sold until that occurs.
Typical timing for such amendments points toward possible effectiveness around early December 2026, though the SEC review process will determine the actual calendar.
The filing reflects a broader pattern among asset managers of pairing crypto price exposure with options-based income strategies as the listed derivatives market for digital asset ETFs expands. Whether the product ultimately launches, and how it performs in practice, will depend on regulatory clearance, options-market liquidity, and investor appetite for the risk-return profile described.
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