Winklevoss Zcash ETF Seeks Nasdaq Listing for ZEC Shares
The proposed trust would hold Zcash and aim to track its price for brokerage-account investors.
Winklevoss Zcash ETF is an exchange-traded product that would issue shares of beneficial interest seeking to list and trade on the Nasdaq Stock Market, with the stated purpose of holding ZEC, the digital asset created and transmitted through the peer-to-peer Zcash Network. The trust’s investment objective is to provide exposure to the price of ZEC held by the trust, less operating expenses and other liabilities, and it is described as a passive vehicle that does not seek returns beyond tracking that price. Net asset value would be set each business day by reference to a pricing benchmark calculated from a time-weighted average price of an underlying index aggregating executed trade flow on major ZEC trading platforms.
The sponsor is Winklevoss Asset Services, LLC, a Delaware limited liability company wholly owned by Winklevoss Asset Services Holdings, LLC. Custody is intended to sit with Gemini Trust Company, LLC, an affiliate of the sponsor and a New York State-chartered limited liability company supervised by the New York State Department of Financial Services. The prospectus says the custodian is not FDIC-insured but carries private insurance, and that it must meet NYSDFS capitalization, compliance, anti-money laundering, consumer-protection and cyber-security requirements. Shareholders would take no part in management or control of the trust.
The company says the product would let investors access ZEC through a traditional brokerage account without the barriers of acquiring and holding the asset directly, and that the trust will not use derivatives that could add counterparty and credit risk. It also says the design is meant to help certain investors implement strategic and tactical asset-allocation strategies using ZEC by buying shares rather than the asset itself. ZEC ownership, the prospectus notes, does not entitle holders to company profits or income payments; it is recorded on a decentralized ledger, and value is set by supply and demand on digital-asset markets or in private transactions.
Risk factors stress that ZEC and other digital assets have experienced extreme volatility and that future declines could cause shares to lose all or substantially all of their value. The trust is not actively managed and would not act to exploit or mitigate that volatility. The prospectus also flags that U.S. political leadership and economic policy can create uncertainty around ZEC prices, citing an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, and noting that market prices of certain digital assets fell after the order’s final content. Proceeds from basket issuance would consist of ZEC or cash, held by the custodian or cash custodian until used for redemptions, ZEC purchases, or sponsor fees and trust expenses.