Grayscale is moving to make its Zcash exchange-traded fund cheaper on a per-share basis by splitting the stock 3-for-1.
According to a filing with the U.S. Securities and Exchange Commission, the fund, which trades under the ticker ZCSH, filed on Friday to carry out a forward share split. Shareholders of record at the close of trading on Sept. 28 will receive two additional shares for every one share they hold.
A forward split does not change the total value of an investment. It only breaks each share into smaller units. Grayscale’s own example in the filing says that 10 shares worth $300 each, or $3,000 in total, would become 30 shares worth $100 each, with the total still at $3,000.
How the split will work
In the filing, Grayscale said, 「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 company also said, 「As a result of the Forward Split, holders as of the Record Date will receive two additional Shares, to be distributed on the Payment Date.」
The filing added, 「Immediately following the Forward Split, the NAV per Share is expected to be approximately one-third of the NAV per Share immediately before the Forward Split.」
The additional shares will be distributed after the market closes on Sept. 29. Split-adjusted trading will begin before the market opens on Sept. 30. The fund will keep trading under the ticker ZCSH, and its CUSIP number will remain unchanged.
Heavy inflows behind the move
The split follows a month of strong investor demand for the fund. Since trading began on Aug. 25, ZCSH has brought in more than $233 million in inflows. That total includes a $46.6 million day this week and a single $112 million day on Sept. 8. Net assets stood at about $890 million as of Sept. 17.
Decrypt said Zcash has climbed more than 2,800% over the last year. That rally pushed the ETF’s share price higher and raised the cost of buying a whole share. While crypto exchanges allow investors to buy fractional amounts of a token, stock purchases through brokers generally do not work the same way, which is why splits are used.
What ZCSH holds
ZCSH is the world’s first spot exchange-traded fund that directly holds Zcash’s token, ZEC. It was launched through a straight conversion of Grayscale’s older Zcash Trust, which already held roughly $313 million in ZEC by the time trading began on NYSE Arca.
Zcash gives users the option to make transactions public or hidden. It uses cryptography known as zk-SNARKs, which can prove a payment is valid without revealing the sender, the receiver, or the amount transferred. Like Bitcoin, Zcash has a capped supply of 21 million coins.
Privacy-coin access through a regulated ETF
Decrypt said ZEC has surged this year as concerns have grown over how easily digital money can be tracked. Packaging a privacy coin inside a regulated ETF gives access to investors with brokerage accounts, rather than only those who already use a crypto wallet.
The report also said ZEC is seen as more acceptable from a regulatory standpoint than some alternatives, including Monero, whose token trades under XMR. According to the report, major exchanges have banned Monero after pressure from law enforcement agencies.
Grayscale has used stock splits before for the same reason. In December 2020, after ETH had risen enough to make individual shares expensive for smaller investors, the company carried out a 9-for-1 split for its Ethereum Trust. Decrypt said ZEC’s rally has now created the same setup for ZCSH.