Zcash is no longer just a niche privacy cryptocurrency. After a roughly 741% surge over the past year, the token is attracting a second U.S. spot ETF filing as institutional access to privacy-focused crypto gathers momentum.
Winklevoss Asset Services, the fund sponsor run by Cameron Winklevoss, filed with the SEC on Tuesday for the Winklevoss Zcash ETF, which would hold ZEC directly and trade on Nasdaq under the proposed ticker WINK.
But the more interesting story may be what is happening with the first U.S. spot Zcash ETF.
Grayscale's Zcash ETF Has Built a Nearly $1 Billion Position
Grayscale's Zcash ETF (NYSE: ZCSH) began trading on Aug. 25, giving U.S. investors their first exchange-traded vehicle for direct ZEC exposure.
The fund quickly accumulated a large position. Data from Zcash Treasuries showed ZCSH held 644,878 ZEC worth $977.4 million as of Sep. 23, while cumulative net primary-market inflows had reached $306.1 million.
That gives the Winklevoss product an established market to compete for rather than having to create demand from scratch.
The timing is notable because ZEC has dramatically outperformed much of the broader crypto market. According to data cited by 247WallSt, Zcash has gained roughly 741% over the past year, while Bitcoin has declined about 30% over the same period.
WINK Could Start a Zcash ETF Fee War
One of the biggest differentiators could be cost.
The Winklevoss filing proposes a 0.25% annual sponsor fee, accrued in ZEC. That is dramatically below the 2.5% sponsor fee currently listed for ZCSH.
The difference is significant for investors holding the product over several years. It also gives WINK an obvious marketing advantage if the ETF launches with the proposed fee intact.
However, ZCSH has already established a sizeable asset base and first-mover advantage.
More recent flows suggest the initial enthusiasm has cooled. Farside Investors data shows ZCSH saw $81.2 million of outflows between Sept. 28 and Oct. 5, including $26.9 million on Oct. 2 and $3.6 million on Oct. 5. The fund's cumulative net inflows stood at $225 million over the period tracked by Farside.
That makes the next phase of the Zcash ETF market particularly important. WINK will need to compete not only for new money but potentially for investors already exposed through ZCSH.
Privacy Is Becoming an ETF Theme
Zcash's appeal is also different from that of Bitcoin or many other recently launched crypto ETFs.
The project is built around privacy-preserving transactions, using zero-knowledge technology to allow transaction information to be shielded. That gives ZEC a distinct investment narrative as demand for privacy-focused digital assets gains traction.
The broader U.S. crypto ETF market has also expanded well beyond Bitcoin and Ethereum, with spot products now providing exposure to a growing list of alternative cryptocurrencies.
WINK would push that trend into one of crypto's more controversial niches.
The Winklevoss Brothers Are Back in the ETF Game
The filing also marks an interesting return for the Winklevoss name in the crypto ETF market.
In 2017, the SEC rejected the brothers' proposal for the Winklevoss Bitcoin Trust, years before spot Bitcoin ETFs eventually became reality.
Nearly a decade later, the brothers are returning with a much more unconventional target.
The proposed WINK ETF would charge 0.25%, hold ZEC directly and potentially receive up to $100 million of investment interest from affiliates of Winklevoss Capital, although the filing makes clear those indications are not binding commitments.
The bigger question now is whether Zcash's extraordinary rally can translate into lasting institutional demand, and whether a lower-cost competitor can take meaningful market share from the first U.S. Zcash ETF.
