Grayscale Funds Trust submitted a registration statement to the U.S. Securities and Exchange Commission on September 25, 2026, for the ZCSH High Income ETF. The proposed exchange-traded fund would pursue current income through options strategies linked to Grayscale’s existing Zcash ETF while seeking some capital appreciation potential.

The new product differs from the firm’s ZCSH fund, which holds Zcash (ZEC) and began trading on NYSE Arca on August 25, 2026. Options on ZCSH shares started trading on September 8. The income-oriented ETF would not own ZEC or shares of the spot product. Instead, it would gain exposure through derivatives and could hold short-term U.S. Treasuries and money-market funds as collateral.

Options Strategy and Distribution Plan

According to the filing, the fund intends to use a synthetic covered-call approach. It would buy call options and sell put options on Zcash exchange-traded products to approximate price movements of the underlying. At the same time, it would sell call options to collect premiums. Those premiums would fund planned biweekly distributions to shareholders.

At least 80 percent of the fund’s assets are expected to be allocated to options on Zcash exchange-traded products. Strike prices would be selected based on prevailing market conditions. Selling calls creates a trade-off: the fund retains the premium but may forgo gains if the reference asset rises sharply above the strike. Downside exposure remains if prices decline. Distributions would not be fixed and could vary with option premiums, market conditions, and strategy performance. In some cases, payments might include a return of capital.

The prospectus lists the ticker symbol and exchange as pending. Grayscale has requested an effective date 75 days after the filing, which could place a potential launch in early December 2026, subject to the registration process becoming effective. The document remains preliminary and subject to change. Securities may not be sold until the registration statement is effective.

Context of Existing Zcash Product Growth

The filing arrives as Grayscale’s ZCSH ETF has expanded rapidly. The product reached approximately $1 billion in assets under management around September 24, 2026. Cumulative net inflows accounted for roughly $306 million of that total, with the balance largely driven by the rising value of its ZEC holdings following conversion from an earlier trust structure.

ZCSH converted from Grayscale’s prior Zcash Trust and has attracted inflows amid a strong period for the privacy-focused cryptocurrency. ZEC has recorded substantial year-to-date gains, though recent trading has shown some cooling, with open interest pulling back from recent peaks near $3.5 billion.

An affiliate of the fund’s adviser sponsors the existing ZCSH product and earns fees on it. The filing notes that activity in the proposed income fund could increase demand for ZCSH and, indirectly, those affiliate fees.

Structure and Investor Considerations

The proposed ETF forms part of a broader category of products that use crypto-linked options to seek income, similar in concept to covered-call strategies applied to other digital assets. Investors in the new fund would hold shares of an options-based vehicle rather than direct exposure to ZEC or the spot ZCSH ETF. Results may therefore diverge from movements in the cryptocurrency’s price.

The strategy aims to deliver regular distributions while maintaining some participation in potential appreciation. However, the capped upside from sold calls and full downside risk mean the return profile would differ from a straightforward holding of the underlying asset. Management fees, final ticker, and listing venue remain to be determined in subsequent filings.

As of the filing date, the SEC has neither approved nor disapproved the securities. The prospectus is still subject to amendment, and no shares can be offered or sold until the registration becomes effective.