Grayscale XLM Trust Navigates Volatility, Sponsor Shift in 2025 10-K

TL;DR

**Avoid GXLM; its lack of redemption mechanism and XLM's unproven utility make it a highly speculative bet on a volatile, niche digital asset.**

AI Summary

Grayscale Stellar Lumens Trust (XLM) filed its 10-K for the fiscal year ended September 30, 2025, revealing a market value of $36,893,428 for shares held by non-affiliates as of March 31, 2025, with 1,389,200 shares outstanding as of November 20, 2025. The Trust's primary purpose is to hold Stellar Lumens (XLM), which had an aggregate market value of $11.6 billion as of September 30, 2025, making it the 16th largest digital asset by market capitalization. The Trust holds approximately 0.4% of the XLM in circulation. Key business changes include a sponsor reorganization on January 1, 2025, where Grayscale Investments Sponsors, LLC (GSIS) became the sole sponsor after Grayscale Investments, LLC and Grayscale Operating, LLC transitioned out. The Trust also amended its fiscal year-end from September 30 to December 31, effective January 1, 2025. Significant risks include the extreme volatility of XLM, the largely unregulated nature of Digital Asset Trading Platforms, and the historical trading of GXLM shares at substantial premiums or discounts to NAV due to the lack of an ongoing redemption program. The strategic outlook remains tied to the adoption and value of XLM, a digital asset designed for cross-currency transactions, despite its primary advantage not being widely adopted.

Why It Matters

This 10-K highlights the inherent risks and structural challenges within the digital asset trust market, particularly for single-asset trusts like GXLM. Investors face significant volatility due to XLM's price fluctuations and the lack of an arbitrage mechanism, leading to shares trading at substantial premiums or discounts to NAV. The sponsor reorganization and fiscal year-end change introduce administrative shifts, but the core investment thesis remains tied to XLM's adoption, which has not been widespread. This competitive landscape, where XLM's primary advantage isn't widely adopted, underscores the speculative nature of this investment compared to more established digital asset products.

Risk Assessment

Risk Level: high — The risk level is high due to the 'extreme volatility of trading prices that many digital assets, including XLM, have experienced' and the 'largely unregulated nature and lack of transparency surrounding the operations of Digital Asset Trading Platforms.' Furthermore, the filing explicitly states 'there is no arbitrage mechanism to keep the value of the Shares closely linked to the Index Price and the Shares have historically traded at a substantial premium over, or a substantial discount to, the NAV per Share,' indicating significant price dislocation risk.

Analyst Insight

Investors should exercise extreme caution and thoroughly understand the lack of a redemption program and the potential for significant NAV divergence before considering GXLM. Given the high volatility and the unproven widespread adoption of XLM's primary use case, a 'wait and see' approach or allocation to more liquid and regulated digital asset products might be prudent.

Key Numbers

• $36,893,428 — Aggregate market value of shares held by non-affiliates (As of March 31, 2025, indicating the public float's valuation.)
• 1,389,200 — Number of Shares outstanding (As of November 20, 2025, representing the total issued shares.)
• $11.6 billion — Aggregate market value of Stellar Lumens (XLM) (As of September 30, 2025, positioning XLM as the 16th largest digital asset.)
• 0.4% — Trust's holding of XLM in circulation (As of September 30, 2025, indicating a relatively small market influence.)
• 31.9 billion — Circulating supply of Stellar Lumens (XLM) (As of September 30, 2025, highlighting its significant supply compared to Bitcoin.)
• 16th — XLM's ranking by market capitalization (As of September 30, 2025, according to CoinMarketCap.com.)
• 55 billion — XLM burned by SDF (In November 2019, reducing total supply from 105 billion to 50 billion.)
• 25 billion — XLM held by SDF (As of November 2019, representing approximately 50% of the total supply after the burn.)
• 100 — Shares per Basket (The minimum block size for issuing new shares to Authorized Participants.)
• January 1, 2025 — Effective date of fiscal year-end change (The Trust's fiscal year-end moved from September 30 to December 31.)

Key Players & Entities

• Grayscale Stellar Lumens Trust (XLM) (company) — Registrant of the 10-K filing
• Grayscale Investments Sponsors, LLC (company) — Sole sponsor of the Trust as of May 3, 2025
• Stellar Lumens (company) — Underlying digital asset held by the Trust
• Jed McCaleb (person) — Co-founder of Ripple Labs, Inc. and Stellar Development Foundation
• SEC (regulator) — U.S. Securities and Exchange Commission
• Digital Currency Group, Inc. (company) — Parent company of the Co-Sponsors
• Coinbase Custody Trust Company, LLC (company) — Custodian of the Trust
• CSC Delaware Trust Company (company) — Trustee of the Trust
• Continental Stock Transfer & Trust Company (company) — Transfer Agent of the Trust
• Stellar Development Foundation (company) — Creator and overseer of XLM distribution

FAQ

Risk Factors

• Volatility of Stellar Lumens (XLM) [high — market]: The Trust's primary investment is in XLM, a digital asset known for its extreme price volatility. This volatility directly impacts the Net Asset Value (NAV) of the Trust and the market price of its shares (GXLM). The value of the Trust's holdings can fluctuate significantly in short periods, posing a substantial risk to investors.
• Digital Asset Trading Platform Risks [high — market]: The Trust's operations and the valuation of its underlying assets are dependent on digital asset trading platforms. These platforms are largely unregulated, which can lead to risks such as platform failures, security breaches, and operational disruptions. Such events could adversely affect the Trust's ability to manage its XLM holdings.
• Lack of Redemption Program and NAV Discrepancies [high — market]: The Trust does not offer an ongoing redemption program, meaning shareholders cannot redeem their shares directly with the Trust for underlying XLM. This has historically caused GXLM shares to trade at substantial premiums or discounts to their NAV, creating price discovery challenges and potential investor losses.
• Uncertain Regulatory Landscape [medium — regulatory]: The digital asset industry operates in a rapidly evolving and uncertain regulatory environment. Changes in regulations, or the interpretation of existing regulations, could impact the Trust's ability to operate, the value of XLM, and the overall market for digital asset trusts.
• Sponsor Reorganization Impact [low — operational]: A sponsor reorganization occurred on January 1, 2025, with Grayscale Investments Sponsors, LLC (GSIS) becoming the sole sponsor. While intended to streamline operations, such transitions can introduce operational complexities or unforeseen challenges that may affect the Trust's management and administration.

Industry Context

The digital asset market continues to mature, with cryptocurrencies like Stellar Lumens (XLM) vying for adoption in cross-border payments and tokenized assets. However, the sector remains highly competitive and subject to rapid technological advancements and evolving investor preferences. The primary advantage of XLM, facilitating cross-currency transactions, has not yet achieved widespread adoption, placing it in a challenging position relative to more established digital assets.

Regulatory Implications

The largely unregulated nature of digital asset trading platforms presents significant operational and counterparty risks. Furthermore, the evolving regulatory landscape for digital assets globally could introduce new compliance burdens or impact the viability of trusts holding such assets, potentially affecting the Trust's operations and the value of its XLM holdings.

What Investors Should Do

1. Monitor XLM Volatility and Adoption
2. Assess Premium/Discount to NAV
3. Evaluate Sponsor Stability
4. Understand Regulatory Risks

Key Dates

• 2025-01-01: Sponsor Reorganization — Grayscale Investments Sponsors, LLC (GSIS) became the sole sponsor, transitioning out Grayscale Investments, LLC and Grayscale Operating, LLC. This consolidates sponsorship and may impact operational management.
• 2025-01-01: Fiscal Year-End Change — The Trust's fiscal year-end changed from September 30 to December 31. This impacts reporting periods and financial statement comparability year-over-year.
• 2025-03-31: Market Value of Shares Held by Non-Affiliates — Reported at $36,893,428, this provides a snapshot of the public float's valuation at a specific point in time.
• 2025-09-30: Aggregate Market Value of Stellar Lumens (XLM) — Stellar Lumens had an aggregate market value of $11.6 billion, ranking it as the 16th largest digital asset. This highlights the underlying asset's market significance.
• 2025-11-20: Shares Outstanding — 1,389,200 shares were outstanding, representing the total number of GXLM shares available in the market.

Glossary

Net Asset Value (NAV)

The per-share market value of a trust's assets minus its liabilities. For digital asset trusts, it's typically calculated based on the market price of the underlying digital assets. (Crucial for understanding the intrinsic value of GXLM shares and identifying premiums or discounts in market trading.)

Authorized Participant (AP)

An entity, typically a large financial institution, that can create and redeem large blocks of shares (Baskets) of an ETF or trust directly with the issuer. (The absence of APs engaging in redemptions is a key reason for GXLM's historical trading at premiums/discounts to NAV.)

Basket

A minimum block size of shares (e.g., 100 shares for GXLM) that an Authorized Participant must create or redeem. (Defines the unit of creation/redemption for APs, influencing market liquidity and NAV tracking.)

Stellar Lumens (XLM)

A cryptocurrency designed for fast, low-cost cross-border transactions and tokenized assets, operating on the Stellar network. (The sole underlying asset held by the Grayscale Stellar Lumens Trust.)

Sponsor

The entity responsible for the administration, marketing, and management of a trust or fund. (GSIS is the sole sponsor after a reorganization, impacting the Trust's governance and operations.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and new risks, is not available in the provided text. The 10-K filing indicates a change in fiscal year-end from September 30 to December 31, effective January 1, 2025, which will affect year-over-year comparisons in future filings. A sponsor reorganization also occurred, potentially impacting operational aspects.

Key Financial Figures

• $133.6 million — r Lumens and Bitcoin were approximately $133.6 million and $17.0 billion, respectively. As of
• $17.0 b — n were approximately $133.6 million and $17.0 billion, respectively. As of September 30
• $11.6 b — gate market value of Stellar Lumens was $11.6 billion, as compared to the $2,272.9 bill
• $2,272.9 billion — s was $11.6 billion, as compared to the $2,272.9 billion aggregate value of Bitcoin. As of Septe

Filing Documents

• gxlm-20250930.htm (10-K) — 2759KB
• gxlm-ex4_5.htm (EX-4.5) — 39KB
• gxlm-ex31_1.htm (EX-31.1) — 25KB
• gxlm-ex31_2.htm (EX-31.2) — 25KB
• gxlm-ex32_1.htm (EX-32.1) — 8KB
• gxlm-ex32_2.htm (EX-32.2) — 8KB
• img54457314_0.jpg (GRAPHIC) — 1071KB
• img54457314_1.jpg (GRAPHIC) — 871KB
• img54457314_2.jpg (GRAPHIC) — 682KB
• 0001193125-25-297570.txt ( ) — 12919KB
• gxlm-20250930.xsd (EX-101.SCH) — 406KB
• gxlm-20250930_htm.xml (XML) — 907KB

Forward-Looking Statements

Forward-Looking Statements This Annual Report on Form 10-K contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Stellar Lumens Trust (XLM) (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 Annual Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust's operations, the plans of Grayscale Investments, LLC ("GSI"), the sponsor of the Trust before January 1, 2025, Grayscale Operating, LLC ("GSO"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC ("GSIS"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025 and the sole remaining sponsor thereafter (each of GSI, GSO and GSIS, the "Sponsor", as the context may require, and GSO and GSIS, together, the "Co-Sponsors"), 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 from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in "Part I.

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 49 Item 1B. Unresolved Staff Comments 81 Item 1C. Cybersecurity 81 Item 2.

Properties

Properties 81 Item 3.

Legal Proceedings

Legal Proceedings 82 Item 4. Mine Safety Disclosures 82 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 83 Item 6. [Reserved] 83 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 84 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 91 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 91 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 91 Item 9A.

Controls and Procedures

Controls and Procedures 91 Item 9B. Other Information 92 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 92 PART III Item 10. Directors, Executive Officers and Corporate Governance 93 Item 11.

Executive Compensation

Executive Compensation 94 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13. Certain Relationships and Related Transactions, and Director Independence 95 Item 14. Principal Accountant Fees and Services 96 PART IV Item 15. Exhibits and Financial Statement Schedules 98 Item 16. Form 10-K Summary 100 Glossary of Defined Terms 101 iv PART I

B usiness

Item 1. B usiness Overview of the Trust and the Shares Grayscale Stellar Lumens Trust (XLM) (the "Trust") is a Delaware Statutory Trust that was formed on October 26, 2018 by the filing of the Certificate of Trust with the Delaware Secretary of State in accordance with the provisions of the Delaware Statutory Trust Act. The Trust's purpose is to hold Stellar Lumens ("XLM"). The Stellar Ledger uses a consensus mechanism called the Stellar Consensus Protocol which is an implementation of the Federated Byzantine Agreement pioneered by Ripple, which is similar to proof-of-stake, but does not include staking rewards or incentives. Instead, the Federated Byzantine Agreement is a consensus mechanism where nodes independently decide which other nodes to trust for information. Lumens transactions are resolved around every six seconds, which is faster than Bitcoin's block production, which are resolved around every 9 minutes. As of September 30, 2025, Stellar Lumens had a circulating supply of approximately 31.9 billion coins, which is more than Bitcoin's current circulating supply of approximately 19.9 million coins. As of September 30, 2025, the 24-hour trading volume of Stellar Lumens and Bitcoin were approximately $133.6 million and $17.0 billion, respectively. As of September 30, 2025, the aggregate market value of Stellar Lumens was $11.6 billion, as compared to the $2,272.9 billion aggregate value of Bitcoin. As of September 30, 2025, XLM was the 16th largest digital asset by market capitalization as tracked by CoinMarketCap.com. The Stellar Network's intended function is to allow users or businesses to conduct cross-currency transactions securely and quickly. A conventional cross-currency transaction often requires liquidity providers to work across several currency pairs to facilitate the transaction, which increases transaction costs and can be time-intensive, particularly when transacting between two rarely traded currency pairs. To reduce the costs and tim

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