Zcash Grayscale ETF: Who Holds the Keys to 1 in 30 ZEC?

Grayscale converted its Zcash fund into an ETF on NYSE Arca on August 25. By September 18 the fund held about 596,000 ZEC, roughly 3.5% of all circulating Zcash. Grayscale itself says those coins are transparent Zcash held in Coinbase custody, not the shielded, private version that makes Zcash distinct.

For anyone holding Zcash, that detail matters. Headlines about Wall Street buying a coin can feel like validation. But according to the video, much of the fund’s pile was already there before the ETF launched, the largest deposit since launch came from a company in Grayscale’s own corporate family, and the fund’s shareholders give up the privacy feature entirely. This article covers what the video found in the filings and interviews, both the good and the bad.

What is the Grayscale Zcash ETF?

The Grayscale Zcash ETF is an exchange-traded fund that lets anyone with a brokerage account buy shares backed by a pile of Zcash (ZEC), much like buying shares in a listed company. Grayscale converted its older Zcash trust into the ETF on August 25 and listed it on the New York Stock Exchange’s Arca market.

On launch day, Grayscale’s trading head described Zcash on Bloomberg. He said it resembles Bitcoin because it has a capped supply and uses proof-of-work, meaning miners spend computing power to secure the network and earn new coins. The difference, he said, is privacy. Users can choose to move funds into a “shielded pool” so their transactions are not broadcast publicly, and they can still reveal that information if they want.

The video’s analogy is a road with two lanes. One lane has glass walls, so anyone can see what passes through. The other has the blinds down. The user picks the lane.

According to the video, Grayscale’s head of research, Zach Pandl, linked the timing partly to AI and its ability “potentially to monitor our activity on chain.” The video also plays a 2025 clip of SEC Commissioner Hester Peirce. In it she says privacy-protecting chains are a good thing and that she would want one herself.

Does one fund really hold 1 in 30 Zcash?

The Grayscale Zcash ETF did hold about 1 in 30 ZEC by September 18, but the headline overstates how much of that is new. Crypto Briefing counted about 596,000 ZEC in the fund by that date, about 3.5% of circulation. Six days later, Grayscale posted that the fund had passed $1 billion. Since then, Crypto Briefing has reported a weekly outflow of about $93.56 million, with assets down to about $751 million from the September peak.

The fund’s history explains much of the total. Its prospectus says the trust was formed on October 23, 2017. The video says that on June 30, before it became an ETF, the trust already held about 2.3% of all circulating Zcash. If that figure is right, well over half of the 3.5% was in the fund before a single ETF share traded.

In a launch-day clip the video attributes to Pandl, the speaker makes a related point. The ETF is not a brand-new product. Long-time holders had already seen strong returns, so “there can be profit taking.” For years, shares in the old trust could not be swapped back for coins. As an ETF, the fund creates and redeems shares in both directions. The video’s reading is that part of the activity is long-term holders finally having an exit.

Zcash founder Zooko Wilcox added context. Fewer new coins are created now than in Zcash’s early years, he said, so a buyer has to get coins either from miners or from existing holders. The video’s point is that every ETF purchase has a seller on the other side.

Who was the biggest depositor into the Zcash ETF?

The biggest single depositor into the Grayscale Zcash ETF since launch was DCG International, according to Crypto Briefing. DCG International is part of Digital Currency Group, Grayscale’s parent company. On September 8 it handed the fund about 85,700 ZEC, worth around $100 million. The video says that was close to two in every three new Zcash added between launch and September 18, based on Crypto Briefing’s numbers. That share depends on which starting figure is used.

Of the roughly $1 billion in the fund, bitcoin.com counted about $306 million as new money. The rest was coins already held plus the rise in price. Crypto Briefing described the activity as “more of a reshuffling within the family.” The video stresses that all of this was above board and disclosed in filings. It simply reads differently from a headline suggesting banks queuing up to buy.

What happened with the Zcash counterfeiting bug?

The Zcash counterfeiting bug was a flaw that in theory could have let someone create coins nobody could see. According to Shielded Labs, security engineer Taylor Hornby, whom it hired in April, found the flaw on May 29. The video says no fake coins were ever found, but the ZEC price more than halved. On launch day, Bloomberg’s Tim Stenovec described the drop to Grayscale as a fall from about $630 to $250, and Grayscale agreed.

Grayscale’s on-air answer was that the Zcash Foundation had asked for the audit, and that the issue was found and disclosed proactively. Shielded Labs’ own account says it commissioned the review. The permanent fix, an upgrade called Ironwood, went live on July 28. The video calls the episode “a fair hit” on Zcash’s security record, but sees the disclosure and fix as a sign of a maturing project.

Which kind of Zcash does the ETF hold?

The Grayscale Zcash ETF holds transparent Zcash, not shielded Zcash, and Coinbase holds the keys. In a clip the video attributes to Pandl, the speaker says the trust holds “transparent and auditable Zcash in the Coinbase custody like our other ETF products.” The fund is designed for investment exposure, he adds, and Grayscale is not in the business of offering access to shielded Zcash.

He also encouraged listeners to look at shielded Zcash, which he described as where the real value lies. In a separate interview he described two ways to own Zcash. One is the ETF, for exposure inside a brokerage or tax-advantaged account. The other is a self-custody wallet, for anyone who wants the full benefit of on-chain financial privacy.

The video’s view is that a fund answering to auditors more or less has to use the transparent lane. The cost is that it skips the one feature that sets Zcash apart.

How do the Grayscale and Winklevoss Zcash funds compare?

The Winklevoss twins filed with the SEC on October 6 for their own Zcash fund, to be listed on Nasdaq, at a much lower fee than Grayscale’s. According to the video, Bloomberg ETF analyst James Seyffart said the fee gap leaves room to undercut Grayscale.

	Grayscale Zcash ETF	Winklevoss Zcash fund (filed)
Exchange	NYSE Arca	Nasdaq
Annual fee	2.5%	0.25%
Custodian	Coinbase	Gemini (the twins’ company)
Status	Trading since August 25	Filed with the SEC on October 6

In a 2025 interview, the twins said AI is to privacy what the 2008 financial crisis was to Bitcoin. They described Bitcoin as where you store value and Zcash as where you spend it. The video notes that their fund’s coins would still sit with a custodian, so it is another set of keys that do not belong to the shareholder.

Zooko made a similar point about listed companies that hold Zcash. Many institutions cannot buy the coins directly “like you and I do,” he said, so they buy shares instead.

A quick check on your own Zcash

The video offers a simple custody check partway through, and near the end it gives three questions any holder can work through.

The check:

1. If you get into your Zcash with an email and password, the exchange usually holds the keys.
2. If your Zcash receiving address starts with the letter “t”, you are on the transparent side, the same as the ETF.

The three questions:

1. Who holds my keys? An exchange, a fund’s custodian, or you.
2. Are my coins doing anything, or just sitting there? Know where they are and what that arrangement involves.
3. What is my rule for getting in and out? The funds have theirs written down. The video says most individuals go on feeling.

The video warns about relying on someone else’s door with the March 2013 Cyprus banking crisis. Banks there closed for 12 days. After they reopened on March 28, withdrawals were limited to about 300 euros a day. The video also points out a difference that is easy to miss. Grayscale’s coins sit under a prospectus with auditors and a named custodian, while a personal exchange account is just a login.

What to watch next

The host’s view is that Wall Street’s interest in Zcash is genuine and that more money could follow, though perhaps more slowly than some expect. That is the host’s opinion, not a forecast.

The concrete item to watch is NU7, the next Zcash network upgrade. According to the video, NU7 was out for testing with blocks every 25 seconds instead of 75, and it had no main network date at the time of recording. Later reports say developers planned to set a mainnet activation height on October 20, with a target of November 5. Check the Zcash developers’ announcements for the current status.

Beyond NU7, watch whether the Winklevoss fund is approved, whether fee competition puts pressure on Grayscale’s 2.5% charge, and how much of future inflows is new money rather than coins moving between existing holders.