Grayscale Horizen Trust Releases Form 10-K Report
Grayscale Horizen Trust (ZEN), a Delaware Statutory Trust established to manage Horizen (ZEN), has published its Form 10-K report, offering an in-depth look at its financial and operational results for the fiscal year concluding on September 30, 2025. The Trust’s primary objective is to provide investors with a way to gain exposure to ZEN through shares that signify ownership within the Trust. This comprehensive report emphasizes crucial financial indicators, operational activities, strategic plans, and the potential risks and challenges encountered by the Trust.
Financial Highlights
Financial performance for the Trust indicated a net realized and unrealized loss on investments totaling $3,639 thousand for 2025. This decline is largely attributed to a decrease in ZEN’s market price, which fell from $8.13 per ZEN on September 30, 2024, to $7.83 per ZEN by September 30, 2025. Additionally, the net decrease in net assets resulting from operations was recorded at $3,885 thousand for the same year, which included the aforementioned investment losses along with the Sponsor’s Fee of $246 thousand.
As of September 30, 2025, the Trust’s total net assets reached $7,481 thousand, reflecting a significant 57% increase over the year. This growth was primarily fueled by an infusion of approximately 390,780 ZEN, valued at $6,599 thousand, contributed to the Trust during share creations, although this was partially offset by the depreciation in ZEN’s price and the withdrawal of around 21,655 ZEN to cover the Sponsor’s Fee.
Examining previous years, in 2024, the Trust reported a net realized and unrealized gain on investment amounting to $236 thousand, with a net increase in assets from operations of $96 thousand, leading to total net assets of $4,767 thousand as of September 30, 2024. The year prior, in 2023, the Trust encountered a net realized and unrealized loss on investment of $3,873 thousand and a net decrease in net assets of $4,020 thousand, with total assets standing at $4,671 thousand as of September 30, 2023.
Business Highlights
The Grayscale Horizen Trust (ZEN) is structured to offer investors exposure to Horizen (ZEN) through shares representing ownership in the Trust. In July 2025, the Horizen Network successfully transitioned from its original standalone blockchain to the Base Network, an Ethereum Layer-2 infrastructure, which has improved its privacy features and on-chain functionalities.
Post-migration, ZEN is now utilized in various privacy-centric projects within the Horizen Protocol and in governance roles, moving away from its former use as a transaction fee and governance token on the previous blockchain. In a significant update in September 2023, the Horizen Network discontinued its privacy shields and ended support for transactions between unshielded and shielded addresses, signaling a departure from its identity as a ‘privacy coin.’
As of September 30, 2025, the Trust holds around 5.5% of the total ZEN in circulation, though this ownership does not grant the Trust influence over the Horizen Network’s development. The Trust’s shares are traded on OTCQX under the ticker ‘HZEN’. However, the absence of a redemption program may lead to shares trading at premiums or discounts compared to the Trust’s net asset value (NAV). ZEN held by the Trust is safeguarded by Coinbase Custody Trust Company, LLC, employing cold storage methods to secure private keys and minimize credit risks.
The Trust has the potential to acquire incidental rights and IR virtual currency through network activities such as forks or airdrops, although it typically relinquishes these rights unless they are determined to be advantageous. The Horizen ecosystem comprises developers, governance participants, investors, and service providers, all of whom contribute to the growth and efficiency of the network. The total supply of ZEN is capped at 21 million, with approximately 17.25 million ZEN currently in circulation following the 2025 migration.
Regulatory Environment
The digital asset market, including ZEN, faces increasing regulatory scrutiny, with possible implications from federal and state authorities in the U.S. examining operations and compliance within the digital asset space.
Strategic Initiatives
The Trust’s strategic focus is on maintaining a passive investment vehicle structure, aimed at providing investors exposure to ZEN without requiring direct investment in the asset itself. The Trust operates without leverage or derivative arrangements and does not accept redemption requests from shareholders at this time. Each year, the Trust identifies its principal market for ZEN, concentrating on markets characterized by high volume, activity, and price stability.
Since its inception, the Trust has opted not to maintain a cash balance, opting instead to sell ZEN to cover expenses and minimize non-ZEN asset holdings. Capital management efforts include issuing Creation Baskets in exchange for ZEN deposits and managing the Sponsor’s Fee, which constitutes the Trust’s sole ordinary expense. A 10-for-1 share split was executed on October 7, 2021, to adjust the number of outstanding shares. Shares are listed on OTCQX, with prices that have fluctuated significantly from the NAV per share, leading to observed premiums and discounts. Shares have been issued to accredited investors under Rule 506(c) of Regulation D in exchange for ZEN.
Looking ahead, the Trust currently has no immediate plans to pursue regulatory approval for a redemption program but may revisit the idea in the future, contingent on regulatory and sponsor consent. The Trust intends to uphold its passive investment strategy while continuously monitoring market conditions and regulatory changes that could influence its operations and capital management strategies.
Challenges and Risks
The Trust faces considerable risks tied to the high volatility of digital asset prices, particularly regarding ZEN, which can significantly impact the value of the shares. The digital asset market has witnessed disruptions, wavering confidence, and reductions in liquidity, intensified by incidents such as the FTX collapse and regulatory actions against major exchanges like Binance and Coinbase. These elements contribute to market instability, potentially undermining the Trust’s financial performance.
Furthermore, the regulatory landscape presents considerable risks, with potential shifts in U.S. and international regulations that could alter the value of digital assets and affect the Trust’s operations. If ZEN were classified as a security, it could result in extraordinary costs or even the termination of the Trust. The largely unregulated status of Digital Asset Trading Platforms also raises the risk of fraud, market manipulation, and operational failures, which could negatively affect the value of ZEN and the Trust’s shares.
Operational risks stem from dependence on third-party service providers, such as custodians and authorized participants. Any failures or changes in these partnerships could disrupt the Trust’s operations and asset safekeeping. Additionally, the possibility of forks or clones emerging from the Horizen Network could adversely impact the valuation of the shares.
Management recognizes the challenges posed by the rapidly evolving digital asset landscape, including increasing regulatory scrutiny and market volatility. The Trust does not actively manage to counteract the effects of ZEN price fluctuations, which may lead to substantial variations in share value. The introduction of new technologies, such as Layer-2 and Layer-3 networks, poses both opportunities and risks, as the successful deployment of these systems remains uncertain and could influence the scalability and security of the Horizen Network.
Market Risk Disclosures
The Trust is subject to market risks due to ZEN price volatility, influenced by global supply dynamics, trading activities, and regulatory developments. The absence of an arbitrage mechanism, coupled with the possibility of shares trading at a premium or discount to NAV, complicates the market risk scenario. Additionally, the arrival of competing digital assets and investment vehicles may diminish demand for ZEN, negatively impacting the value of the shares.
