Grayscale's Biweekly Zcash ETF Aims for High Income

Grayscale has filed for a Zcash ETF that would pay shareholders every two weeks. The fund, called ZCSH High Income ETF, will not hold any Zcash (ZEC) but instead trade options tied to Grayscale's existing spot fund, the Zcash ETF.

The proposed ETF will generate income by selling short-dated calls and collecting premiums from buying call options and selling put options. At least 80% of its net assets must sit in options on Zcash exchange-traded products.

However, there's a catch: selling calls caps the upside, so if ZEC rallies past the chosen strike price, the fund will miss those gains. The options market is also relatively new, with the ZCSH ETF beginning to trade on August 25 and its options following on September 8.

Grayscale flags a potential conflict of interest: an affiliate of the fund's adviser sponsors the ZCSH ETF and earns a fee, which is listed at 2.50% by Yahoo Finance. The new fund's trading could indirectly benefit that affiliate's fees.