Friday, September 5, 2025

Grayscale Digital Large Cap Fund LLC Annual Report Released - Here’s What You Should Know

Grayscale Digital Large Cap Fund LLC (GDLC) – FY 2025 Investor Summary

Fund Overview - GDLC is a Cayman Islands LLC offering exposure to a diversified basket of leading digital assets. - Shares are traded on OTCQX under the symbol "GDLC" and are intended to reflect the market value of a selected index of digital assets, currently the CoinDesk 5 Index (CD5). - As of September 2, 2025, there were 15,867,400 shares outstanding.

Key Financial Metrics (as of June 30, 2025) - Net assets: $777.2 million (2024: $527.0 million; 2023: $272.6 million) - Investments in digital assets at fair value: $777.2 million (cost: $128.7 million) - Principal Market NAV per Share: $48.98 (2024: $33.21; 2023: $17.18) - Total return for year: 47.49% (2024: 93.31%; 2023: 56.75%) - Manager's Fee: 2.5% annualized, accrued daily (FY25 fee: $16.1 million) - No cash balance; redemptions currently not permitted.

Portfolio Composition (% of Net Assets at 6/30/2025): - Bitcoin: 79.83% ($620.4 million; 5,757.74 BTC) - Ether: 11.33% ($88.1 million; 35,007.73 ETH) - XRP: 5.04% ($39.1 million; 16,870,770 XRP) - Solana: 3.01% ($23.4 million; 148,400 SOL) - Cardano: 0.79% ($6.2 million; 10,440,402 ADA) - Total portfolio: $777.2 million (100%)

Results of Operations - Net realized and unrealized gain on investments: $266.4 million (FY24: $264.2 million; FY23: $104.2 million) - Net increase in net assets from operations: $250.3 million (FY24: $254.3 million; FY23: $98.8 million)

Trading & Share Performance - Shares have historically traded at premiums/discounts to NAV; from July 1, 2025 - Sept 2, 2025 max discount to NAV was 10%, avg discount 6%. - OTCQX closing price range (FY25): high $53.82, low $19.65.

Liquidity & Expenses - Expense ratio: 2.5% (manager’s fee; no additional recurring fund expenses paid by the fund) - Extraordinary/non-recurring expenses may be paid via liquidation of digital assets. - No borrowings, derivatives, or leverage.

Recent Portfolio Rebalancing - As of June 5, 2025, the fund rebalanced to reflect the constituents of the CoinDesk 5 Index; currently Bitcoin, Ether, XRP, Solana, and Cardano. - Non-top 5 assets (e.g., AVAX, MATIC, etc.) were removed over recent quarterly rebalances.

Ownership - Digital Currency Group, Inc. owns 1,032,073 shares (6.5% of shares outstanding).

Principal Risks - Volatility: Digital assets, especially the fund’s components, remain highly volatile (e.g., BTC price ranged from $53,113 to $111,517 during FY25). - Regulatory Uncertainty: SEC has asserted that some fund holdings (e.g., SOL, ADA, XRP) may be securities, posing associated legal, operational, and liquidity risks. - Market Structure: Digital asset trading platforms are largely unregulated, with risks of fraud, manipulation, exchange failures, and illiquidity. - NAV Premium/Discount: Shares may trade at substantial premiums or discounts to NAV. - Concentration: Portfolio heavily concentrated in Bitcoin and Ether (over 91% combined); adverse developments in these assets would disproportionately affect the fund. - Operational Risks: Reliance on third-party service providers, including Coinbase Custody, and risks surrounding security of digital assets (e.g., theft, hacking). - No Redemptions: Currently, no share redemptions permitted; ability to exit at NAV is constrained. - Tax and Legal: Uncertain U.S. tax treatment; the fund may be treated as a Passive Foreign Investment Company (PFIC) for U.S. investors. - Conflicts of Interest: Affiliations between manager, distributor, and authorized participant; DCG is both a major shareholder and parent of the manager.

Governance and Structure - Managed by Grayscale Investments Sponsors, LLC; no fund directors, officers, or employees. - Shareholders have limited rights; LLCA gives the manager broad discretion. - Fund does not qualify for SIPC or FDIC insurance. - Quarterly rebalancing; passive management; no staking.

Outlook - Fund size and NAV have roughly tripled since 2023, reflecting strong digital asset price appreciation but also highlighting exposure to market reversals. - The inability to redeem shares, potential for regulatory action, and operational risks inherent to the digital asset ecosystem remain material concerns. - Fund’s strategy and structure may subject holders to significant downside if adverse digital asset or regulatory events occur.

Investor Considerations - GDLC is a highly specialized, single-purpose vehicle for digital asset exposure. Prospective investors should understand and accept the considerable risk/return trade-offs, limitations on redemption, and evolving legal environment. Diversification is limited and value is closely tied to the digital asset markets and the regulatory landscape.

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