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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-43458

The Zcash ETF

SPONSORED BY GRAYSCALE INVESTMENTS SPONSORS, LLC

(Exact Name of Registrant as Specified in Its Charter)

c/o Grayscale Investments Sponsors, LLC

290 Harbor Drive, 4th Floor

Stamford, Connecticut 06902

(Address of Principal Executive Offices) (Zip Code)

(212) 668-1427

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of Shares of the registrant outstanding as of November 2, 2026: 22,197,900

THE Zcash ETF

Table of Contents

PART I – FINANCIAL INFORMATION:

Item 1. Financial Statements (Unaudited)

THE ZCASH ETF

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

(Amounts in thousands, except Share and per Share amounts)

THE ZCASH ETF

SCHEDULES OF INVESTMENT (UNAUDITED)

(Amounts in thousands, except quantity of ZEC and percentages)

THE ZCASH ETF

STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands)

THE ZCASH ETF

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

(Amounts in thousands, except change in Shares outstanding)

THE ZCASH ETF

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our unaudited financial statements and related notes included elsewhere in this Report, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Unless otherwise stated, the terms “we,” “our” and “us” in this Report refer to Grayscale Investments Sponsors, LLC (the “Sponsor”) acting on behalf of the Trust. Statements preceded by, followed by or that include words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Report that address activities, events or developments that will or may occur in the future, including such matters as changes in prices and market conditions (for ZEC and the Shares), the operations of the Trust, the plans of the Sponsor and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions is subject to a number of risks and uncertainties, including the special considerations discussed in this Report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares issued by the Trust. Moreover, neither the Sponsor nor any other person assumes responsibility for the accuracy or completeness of the forward-looking statements. Neither the Trust nor the Sponsor undertakes an obligation to publicly update or conform to actual results any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Trust Overview

The Trust is a passive entity that is managed and administered by the Sponsor and does not have any officers, directors or employees. The Trust holds Zcash tokens (“ZEC”), a type of digital asset based on an open-source cryptographic protocol, and, from time to time, issues blocks of 10,000 common units of fractional undivided beneficial interest in, and ownership of, the Trust (each such unit, a “Share,” and collectively, the “Shares”; each such block, a “Basket”) to certain eligible financial institutions that are registered broker-dealers, have entered into agreements with the Trust and the Sponsor concerning the creation and redemption of Shares, and each own a digital wallet address that is known to the Custodian as belonging to the financial institution or a Liquidity Provider (each, an “Authorized Participant”) in exchange for deposits of ZEC. On August 24, 2026 in connection with the approval of application under the Generic Listing Standards and the effectiveness of the registration statement on Form S-3, the Sponsor authorized the commencement of a redemption program. Shares of the Trust began trading on NYSE Arca, Inc. (“NYSE Arca”) on August 25, 2026, following the effectiveness of the Trust’s registration statement on Form S-3. Through its redemption program, the Trust redeems Shares from Authorized Participants on an ongoing basis. As a passive investment vehicle, the Trust’s investment objective is for the value of the Shares (based on ZEC per Share) to reflect the value of the ZEC held by the Trust, determined by reference to the U.S. dollar value of a ZEC derived from the digital asset trading platforms reflected in the CoinDesk Zcash Benchmark Rate (the “Index”), calculated at 4:00 p.m., New York time, on each business day (the “Index Price”), less the Trust’s expenses and other liabilities. While an investment in the Shares is not a direct investment in ZEC, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to ZEC. The Trust is not managed like a business corporation or an active investment vehicle. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective.

Prior to April 1, 2026, the Trust valued the ZEC held by the Trust for operational purposes by reference to the CoinDesk Zcash Price Index (ZCX), which constituted the Index. From and after April 1, 2026, the Index is the CoinDesk Zcash Benchmark Rate which is used to calculate the Trust’s non-GAAP net asset value (“NAV”) and NAV per Share. NAV is the aggregate value, expressed in U.S. dollars, of the Trust’s assets (other than U.S. dollars or other fiat currency), less its liabilities (which include estimated accrued but unpaid fees and expenses); NAV per Share is NAV divided by the number of Shares outstanding. Prior to April 1, 2026, references to the “Index” in the Trust’s filings with the SEC, including this Report on Form 10-Q, refer to the CoinDesk Zcash Price Index (ZCX). From and after April 1, 2026, references to the “Index” in the Trust’s filings with the SEC are to the CoinDesk Zcash Benchmark Rate.

Critical Accounting Policies and Estimates

Investment Transactions and Revenue Recognition

The Trust considers investment transactions to be the receipt of ZEC by the Trust in connection with Share creations and the delivery of ZEC by the Trust in connection with Share redemptions or for payment of expenses in ZEC. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including transfers of ZEC to satisfy the Trust’s obligation to pay the Sponsor a fee that accrues daily in U.S. dollars at an annual rate of 2.5% of the aggregate value of the Trust’s assets, less its liabilities, as calculated and published by the Sponsor, and is payable in ZEC daily in arrears (the “Sponsor’s Fee”).

The Sponsor intends to use 100% of the Sponsor’s Fee received from the Trust for up to the 12 months following the effectiveness of its registration statement for activities in support of the Trust and initiatives that support the development, marketing and education of the Zcash Network. This commitment is a voluntary undertaking by the Sponsor, paid from the Sponsor’s own funds after receipt of the Sponsor’s Fee, and is not an obligation of the Trust. The Sponsor may modify or discontinue this commitment at any time in its sole discretion.

Principal Market and Fair Value Determination

To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value in accordance with U.S. GAAP (“Principal Market NAV”), the Trust follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820-10, Fair Value Measurement, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for ZEC in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that ZEC is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

For purposes of this Report, a “Digital Asset Market” is a Brokered Market, Dealer Market, Principal-to-Principal Market or Exchange Market, each as defined in the FASB ASC Master Glossary. An Exchange Market is referred to as a “Trading Platform Market” in this Report. The Trust receives ZEC only in connection with a creation order from an Authorized Participant or an unaffiliated service provider that facilitates the purchase or sale of ZEC in connection with creations or redemptions of Baskets (a “Liquidity Provider”) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. Authorized Participants and Liquidity Providers may transact in Digital Asset Markets.

In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order:

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market.

Investment Company Considerations

The Trust is an investment company for U.S. GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services—Investment Companies. The Trust uses fair value as its method of accounting for ZEC in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act. U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.

Review of Financial Results (unaudited)

Financial Highlights for the Three and Nine Months Ended September 30, 2026 and 2025

(All amounts in the following table and the subsequent paragraphs, except Share, ZEC and price of ZEC amounts, are in thousands)

Net realized and unrealized gain for the three months ended September 30, 2026 was $455,007, which includes a realized gain of $1,604 on the transfer of ZEC to pay expenses, a realized gain of $31,157 on the sale of ZEC to meet redemptions, and net change in unrealized appreciation/depreciation of $422,246. Net realized and unrealized gain for the period was driven by ZEC price appreciation from $399.44 per ZEC as of June 30, 2026, to $1,417.68 per ZEC as of September 30, 2026. Net increase in net assets resulting from operations was $452,614 for the three months ended September 30, 2026, which consisted of the net realized and unrealized gain, and the net investment loss of ($2,393). Net assets increased to $875,620 at September 30, 2026, a 464% increase for the three-month period. The increase in net assets resulted from the aforementioned ZEC price appreciation and the contribution of approximately 269,102 ZEC with a value of $318,229 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 2,794 ZEC to pay the foregoing Sponsor’s Fee, and the redemption of approximately 37,338 ZEC with a value of $50,475 from the Trust.

Net realized and unrealized gain for the three months ended September 30, 2025 was $14,290, which includes a realized loss of ($193) on the transfer of ZEC to pay expenses and net change in unrealized appreciation/depreciation of $14,483. Net realized and unrealized gain for the period was driven by ZEC price appreciation from $39.02 per ZEC as of June 30, 2025, to $75.42 per ZEC as of September 30, 2025. Net increase in net assets resulting from operations was $14,182 for the three months ended September 30, 2025, which consisted of the net realized and unrealized gain, and the net investment loss of ($108). Net assets increased to $29,757 at September 30, 2025, a 94% increase for the three-month period. The increase in net assets resulted from the aforementioned ZEC price appreciation and the contribution of approximately 4,290 ZEC with a value of $251 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 2,469 ZEC to pay the foregoing Sponsor’s Fee.

Net realized and unrealized gain for the nine months ended September 30, 2026 was $411,601, which includes a realized gain of $2,796 on the transfer of ZEC to pay expenses, a realized gain of $31,157 on the sale of ZEC to meet redemptions, and net change in unrealized appreciation/depreciation of $377,648. Net realized and unrealized gain for the period was driven by ZEC price appreciation from $509.35 per ZEC as of December 31, 2025, to $1,417.68 per ZEC as of September 30, 2026. Net increase in net assets resulting from operations was $407,425 for the nine months ended September 30, 2026, which consisted of the net realized and unrealized gain, and the net investment loss of ($4,176). Net assets increased to $875,620 at September 30, 2026, a 337% increase for the nine-month period. The increase in net assets resulted from the aforementioned ZEC price appreciation and the contribution of approximately 269,102 ZEC with a value of $318,229 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 7,642 ZEC to pay the foregoing Sponsor’s Fee, and the redemption of approximately 37,338 ZEC with a value of $50,475 from the Trust.

Net realized and unrealized gain for the nine months ended September 30, 2025 was $7,580, which includes a realized loss of ($595) on the transfer of ZEC to pay expenses and net change in unrealized appreciation/depreciation of $8,175. Net realized and unrealized gain for the period was driven by ZEC price appreciation from $56.12 per ZEC as of December 31, 2024, to $75.42 per ZEC as of September 30, 2025. Net increase in net assets resulting from operations was $7,275 for the nine months ended September 30,

2025, which consisted of the net realized and unrealized gain, and the net investment loss of ($305). Net assets increased to $29,757 at September 30, 2025, a 35% increase for the nine-month period. The increase in net assets resulted from the aforementioned ZEC price appreciation and the contribution of approximately 9,178 ZEC with a value of $442 to the Trust in connection with Share creations during the period, partially offset by the withdrawal of approximately 7,352 ZEC to pay the foregoing Sponsor’s Fee.

Cash Resources and Liquidity

The Trust only receives and holds cash in order to facilitate creation or redemption orders effected through cash transactions (“Cash Orders”) and has not otherwise had or maintained a cash balance at any time since inception. When selling ZEC in the Digital Asset Market on behalf of the Trust to pay expenses incurred by the Trust in addition to the Sponsor’s Fee that the Sponsor is not obligated to assume, the Sponsor endeavors to sell the exact amount of ZEC needed to pay expenses in order to minimize the Trust’s holdings of assets other than ZEC. In addition, upon the consummation or deemed failure of a Cash Order to create or redeem Baskets, the Trust will promptly return any excess cash it continues to hold with respect to such Cash Order to the applicable counterparty. As a consequence, the Sponsor expects that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period. Furthermore, the Trust is not a party to any off-balance sheet arrangements.

Generally, the Trust does not intend to hold cash, except in connection with Cash Orders for creations or redemptions of Baskets. Cash includes non-interest bearing non-restricted cash with one institution. Cash in a bank deposit account, at times, may exceed U.S. federally insured limits. The Trust has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on such bank deposits.

In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the periods covered by this Report was the Sponsor’s Fee. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

Selected Operating Data

The Trust reflects creations and redemptions and the ZEC for proceeds receivable or payable with respect to such creations and redemptions, respectively, on the trade date, which is the business day an accepted creation or redemption order is placed by an Authorized Participant. Creation and redemption orders are settled on T+1 or T+2, as established at the time of order placement, and therefore the ZEC for proceeds receivable or payable with respect to such creations and redemptions, respectively, are recorded as a receivable or payable until the ZEC are delivered or removed from the Trust for settlement.

Historical NAV and ZEC Prices

As movements in the price of ZEC will directly affect the price of the Shares, investors should understand recent movements in the price of ZEC. Investors, however, should also be aware that past movements in the ZEC price are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The Trust’s performance prior to August 25, 2026 is based on market-determined prices on the applicable marketplace operated by OTC Markets Group Inc. (“OTC Markets”) and on the Trust’s performance without an ongoing share creation and redemption program. Prior to August 25, 2026, the Trust’s Shares traded at both premiums and discounts to the value of the Trust’s assets, less its expenses and other liabilities, which at times were substantial, in part due to the lack of an ongoing redemption program. Effective as of August 25, 2026, the Trust established an ongoing share creation and redemption program and the Shares of the Trust were listed to NYSE Arca. Hence, the Trust’s performance for periods prior to August 25, 2026 is not directly comparable to, and should not be used to make conclusions in conjunction with, the Trust’s performance for periods subsequent to August 25, 2026.

The following chart illustrates the movement in the Trust’s NAV per Share (as adjusted for the Share Split for the period prior to September 30, 2026) versus the Index Price and the Trust’s Principal Market NAV per Share (as adjusted for the Share Split for the period prior to September 30, 2026) from October 24, 2017 (the inception of the Trust’s operations) to September 30, 2026. For more information on the determination of the Trust’s NAV, see “Item 1. Business—Overview of the ZEC Industry and Market—ZEC Value—The Index and the Index Price” in our Annual Report.

The following table illustrates the movements in the Index Price from October 1, 2021 to September 30, 2026. The Sponsor has not observed a material difference between the Index Price and average prices from the Constituent Trading Platforms as of September 30, 2026 individually, or as a group.

The following table illustrates the movements in the Digital Asset Market price of ZEC, as reported on the Trust’s principal market, from October 1, 2021 to September 30, 2026.