DCG has completed its in-kind investment in Grayscale’s Zcash ETF, handing over 85,705.32563297 ZEC. In August the figure under discussion was around 200,000 tokens.
Nothing was reduced. The arrangement was denominated in dollars rather than coins, and ZEC roughly doubled between the disclosure and the settlement, so the same $100 million bought the fund fewer than half as many tokens.
The Zcash ETF disclosed the transaction in a Form 8-K filed on September 8, stating that DCG International Investments Ltd. acquired shares with an aggregate value of approximately $100 million through an Authorized Participant in exchange for the tokens.
The Arithmetic
The August 18 amendment to Grayscale’s S-3 registration statement disclosed that DCG was in non-binding discussions to contribute approximately 200,000 ZEC in exchange for shares. The Crypto Times reported at the time that this equated to roughly $111 million at prices near $555.
The 8-K describes the same 200,000 figure as representing an intent to invest approximately $100 million based on the market value of ZEC at the time of that disclosure.
The executed transaction implies a price of about $1,166.78 per ZEC. Had DCG delivered the 200,000 tokens originally indicated, the contribution would have been worth approximately $233 million at that level. The filing states the shares carry no preference features and are economically the same as other shares of the Trust.
Where the $500 Million Came From
Grayscale announced separately on September 8 that ZCSH assets under management had passed $500 million, two weeks after its August 25 debut on NYSE Arca.
The release states that the increase includes the approximately $100 million from DCG. That matters for reading the figure: The Crypto Times reported net assets of roughly $414 million on September 5, which means the DCG contribution accounts for most of the move beyond $500 million rather than external subscriptions.
DCG International Investments is a subsidiary of Digital Currency Group, the parent of Grayscale Investments Sponsors, which sponsors the trust. The tokens moved between entities within the same corporate group, from a holder that already owned them, rather than arriving as new capital from outside investors.
Options Began Trading the Same Day
The AUM announcement coincided with the launch of ZCSH options trading on NYSE Arca, which Grayscale said gives investors exchange-traded tools to manage risk, generate income, and express market views.
The announcement also stated that ZCSH remains the only exchange-traded product globally offering spot exposure to ZEC. The fund uplisted from OTCQX to NYSE Arca on August 25, converting the former Grayscale Zcash Trust, which had reported a NAV of $155.16 million as of June 30.
Grayscale states that the fund is not registered under the Investment Company Act of 1940 and is therefore not subject to the same regulations and protections as registered ETFs and mutual funds, and that an investment in ZCSH is not a direct investment in ZEC.
Against the Price Move
The token-count gap is a function of how far ZEC has run. It traded near $555 around the August filing and above $1,190 earlier this week, having crossed $1,000 for the first time on September 5.
DCG chose to hold the difference. Roughly 114,000 ZEC that might have gone into the trust under a token-denominated arrangement remain outside it, worth approximately $133 million at the implied settlement price.
