Grayscale's Proposed Zcash ETF Puts DCG Stake at Risk

Grayscale's proposed Zcash ETF has filed for registration, revealing a potential 34% stake for Digital Currency Group (DCG) International in the fund. The ETF would carry an annual fee of 2.5%, with DCG potentially holding about 34% of the enlarged fund through its affiliate DCG International Investments Ltd. and other related-party holdings.

The filing warns that concentrated ownership could impede active trading, while arbitrage is expected to narrow ZCSH's historic NAV gaps. However, cash-order constraints and limited ZEC-market liquidity could disrupt this process.

Grayscale aims to fix the trust's long-running price-tracking problem with a new ETF structure, allowing authorized participants to create or redeem 10,000-share baskets when ZCSH's market price moves away from the net value of the Zcash tokens held by the fund.