Grayscale Sets 3-for-1 Split for Zcash ETF

Grayscale plans a 3-for-1 forward share split of its Zcash exchange-traded fund after the product gathered about $900 million in assets in less than a month on the market. Shareholders of record at the close of trading on Sept. 28 will receive two additional shares for each share they hold, according to Decrypt, which cited the fund filing with the U.S. Securities and Exchange Commission. CryptoSlate confirmed the same timetable from the company announcement dated Sept. 18.

"The Forward Split is expected to decrease the price per share of the Fund with a proportionate increase in the number of Shares outstanding," the filing states, as quoted in the Decrypt report. The notice adds that holders as of the record date will receive two additional shares, to be distributed on the payment date, and that net asset value per share should land at about one-third of its pre-split level immediately after the split.

The new shares are due to be paid out after the market closes on Sept. 29. Split-adjusted trading is expected to begin before the opening bell on Sept. 30, with the fund keeping its ZCSH ticker and its existing CUSIP number, the code brokers and clearinghouses use to identify the security. Both reports give the same dates and the unchanged ticker.

A forward split does not change the total value of an investment on its own. It cuts each share into smaller pieces, so a holder owns three times as many shares at about one-third of the prior per-share value. The structure can make whole-share purchases easier for smaller buyers after a sharp rise in the value behind each share. The company announcement makes no claim that the move is intended to increase demand or liquidity.

The split terms

The trigger for the split was the speed of the rally in Zcash itself. ZEC changes hands in whole and fractional amounts on crypto exchanges, but ETF shares trade in whole units through brokerage accounts, so a steep climb in the token price pushes the share price out of reach for some buyers. One estimate put the token rise at more than 2,800 percent over the past year, a run that lifted the value represented by each ZCSH share soon after launch.

ZCSH began trading on NYSE Arca on Aug. 25 as the first U.S. spot fund to hold ZEC directly. The fund was born from a conversion of the older Grayscale Zcash Trust, which held roughly $313 million in ZEC by the time the ETF started trading. The Aug. 25 debut date is confirmed in both reports.

Investor demand built fast. The fund has pulled in more than $233 million since it started trading, including a $46.6 million day this week and a single $112 million day on Sept. 8, putting net assets at around $890 million as of Sept. 17. Figures published two days later ran higher: net assets of $914.53 million with $270.95 million in cumulative net inflows, per SoSoValue data, leaving the product about $85 million short of the $1 billion mark. The two snapshots were taken on different days, so the gap reflects timing as well as data sources.

The company had already flagged the pace earlier in the month. Grayscale said the fund had crossed $500 million on Sept. 8, only two weeks after listing. More than $400 million in additional assets arrived after that point, driven by a mix of fresh creations and appreciation in the ZEC already held inside the vehicle.

A month of inflows

Because the product holds ZEC itself, gains in the token inflate the asset base on top of new investor money. That explains why the $914.53 million asset figure is more than three times the $270.95 million cumulative inflow total. Each new high in the token reprices the coins the fund already owns.

ZEC hit an intraday high of $1,521 on Friday, a level The Block described as a new effective all-time high for the privacy coin. A second report recorded a price around $1,540 on Sept. 19, roughly twice the level at which the token traded when ZCSH began listing. Either reading leaves the fund growth tied directly to the token performance.

Derivatives desks have leaned into the move. ZEC futures open interest climbed to an all-time high of about $3.5 billion this week, per CoinGlass data, while futures trading volume crossed $10 billion for the first time since early June. Higher open interest does not show that positioning is uniformly bullish, but the combination of record exposure and heavy turnover leaves the market sensitive to sudden reversals and liquidation cascades.

Zcash gives users a choice between public and hidden transactions through a cryptographic method called zk-SNARKs, which proves a payment is valid without showing the sender, the receiver, or the amount. Like Bitcoin, its supply is capped at 21 million coins (background). ZEC is seen as more acceptable to regulators than rivals such as Monero, whose XMR token has been dropped by major exchanges after pressure from law enforcement agencies.

Grayscale has cut share prices this way before. It split its Ethereum Trust 9-for-1 in December 2020 once a climb in ETH had pushed individual shares beyond the reach of smaller investors. The ZEC rally has now done the same thing to ZCSH, only faster, with the split arriving barely five weeks after the fund first listed (history).

The calendar adds one more marker. Sept. 30, the day split-adjusted trading begins, is also the implementation-readiness deadline for proposed features in NU7, the next Zcash network upgrade. ZCSH could cross the $1 billion line before then if inflows hold and ZEC keeps its recent gains, though the filing makes clear the split itself changes nothing about the aggregate value of any holding. Split-adjusted trading opens under the same ZCSH ticker and CUSIP on Sept. 30.