Grayscale Seeks Sweeping Changes for Stellar Lumens Trust (GXLM)

TL;DR

**Grayscale is pushing for more control over GXLM, potentially at the expense of shareholder oversight, but promising operational efficiency.**

AI Summary

Grayscale Stellar Lumens Trust (GXLM) is seeking shareholder consent for four key proposals to modernize its operations and align with similar investment products. The proposals include enabling cash creation and redemption of Baskets, shifting the Sponsor's Fee payment from monthly to daily in arrears, allowing a portion of the Trust Estate to be held in omnibus accounts for prime brokerage services, and granting the Sponsor sole discretion to amend the Trust Agreement with 20-day shareholder notice for material adverse changes. Currently, shareholder consent is required for amendments materially affecting shareholder interests, necessitating a vote of over 50% of outstanding shares. The Sponsor, Grayscale Investments Sponsors, LLC, believes these changes will improve operational efficiencies, reduce expenses, and maintain parity with other investment vehicles. As of September 25, 2025, there were 1,389,200 Shares outstanding, and a failure to object within 20 calendar days will be deemed a 'FOR' vote.

Why It Matters

These proposed amendments by Grayscale Stellar Lumens Trust (GXLM) could significantly alter the operational dynamics and governance structure of the trust, impacting investors by potentially increasing liquidity through cash creation/redemption and streamlining administrative processes. However, the proposal granting the Sponsor sole discretion to amend the Trust Agreement, even with a 20-day notice for material adverse effects, shifts power away from shareholders, a notable change in competitive context for crypto trusts. Employees and customers might see benefits from improved efficiency, but the reduced shareholder oversight could raise concerns about long-term investor protection and trust transparency in the broader digital asset market.

Risk Assessment

Risk Level: medium — The risk level is medium primarily due to Proposal 4, which grants the Sponsor sole discretion to amend the Trust Agreement, including changes materially adversely affecting shareholders, with only a 20-day notice instead of requiring shareholder consent. This significantly reduces shareholder control over the Trust's governance. While the Sponsor claims this will reduce expenses and improve efficiency, it centralizes power and could lead to decisions not fully aligned with shareholder interests.

Analyst Insight

Investors should carefully review Proposal 4 regarding the Sponsor's increased amendment authority and consider submitting an 'AGAINST' vote if they prioritize shareholder oversight. Evaluate the trade-off between potential operational efficiencies and the reduction in shareholder control before the October 15, 2025 deadline.

Financial Highlights

debt To Equity

0.0

revenue

$0

operating Margin

N/A

total Assets

$0

total Debt

$0

net Income

$0

eps

$0

gross Margin

N/A

cash Position

$0

revenue Growth

N/A

Key Numbers

• 1,389,200 — Shares Outstanding (As of the Record Date, September 25, 2025, each share is entitled to one vote.)
• 50% — Required Shareholder Consent (Each proposal requires consent from over 50% of outstanding shares; failure to object within 20 days is deemed consent.)
• 20 — Days Notice for Amendments (Proposal 4 allows the Sponsor to make materially adverse amendments with only 20 calendar days' notice to shareholders.)
• 10,000 — Shares per Basket (post-amendment) (The number of shares per Basket will change from 100 to 10,000 after the adoption of Additional Amendments.)
• September 25, 2025 — Record Date (Date for determining shareholders entitled to vote on the proposals.)

Key Players & Entities

• Grayscale Stellar Lumens Trust (XLM) (company) — Registrant and Trust seeking amendments
• Grayscale Investments Sponsors, LLC (company) — Sponsor of the Trust and entity soliciting consent
• Edward McGee (person) — Chief Financial Officer of Grayscale Investments Sponsors, LLC
• CSC Delaware Trust Company (company) — Trustee of the Grayscale Stellar Lumens Trust (XLM)
• Coinbase Custody Trust Company, LLC (company) — Custodian for the Grayscale Stellar Lumens Trust (XLM)
• Stellar Network (company) — Decentralized network for XLM digital assets
• Securities and Exchange Commission (regulator) — Regulator for DEF 14A filings
• 1,389,200 (dollar_amount) — Number of Shares outstanding as of September 25, 2025
• October 15, 2025 (date) — Expiration Date for consent solicitation
• December 4, 2018 (date) — Date of the original Amended and Restated Declaration of Trust and Trust Agreement

FAQ

Risk Factors

• Reliance on Sponsor and Potential Conflicts of Interest [medium — operational]: The Trust is entirely dependent on Grayscale Investments Sponsors, LLC for its management and operations. The Sponsor may face conflicts of interest, such as prioritizing its own interests or those of other Grayscale products over the Trust's. This reliance could lead to decisions that are not always aligned with the best interests of the Trust's shareholders.
• Changes to Tax Status and Regulatory Uncertainty [high — regulatory]: Proposal 4 allows the Sponsor to amend the Trust Agreement in ways that could adversely affect the Trust's status as a grantor trust for U.S. federal income tax purposes, provided an opinion of counsel is obtained. This introduces uncertainty regarding the tax treatment for shareholders and potential future regulatory scrutiny.
• Operational Changes and Shareholder Consent [medium — operational]: The proposals aim to streamline operations, including enabling cash creation/redemption of Baskets and holding assets in omnibus accounts. While intended to improve efficiency, these changes alter the Trust's structure and could introduce new operational risks if not managed effectively. The shift to a 20-day notice for material adverse changes (Proposal 4) reduces direct shareholder oversight.
• Underlying Asset Volatility (Stellar Lumens) [high — market]: The Trust's performance is directly tied to the price of Stellar Lumens (XLM). XLM is a cryptocurrency subject to extreme price volatility, market manipulation, and technological risks. Significant declines in XLM's price would directly impact the Trust's Net Asset Value (NAV) and shareholder returns.

Industry Context

The digital asset investment product landscape is evolving rapidly, with a trend towards greater operational efficiency and flexibility. Competitors are increasingly offering products with features like cash creations/redemptions and more frequent fee structures. Grayscale aims to keep its Stellar Lumens Trust (GXLM) competitive by aligning its operational framework with these industry standards.

Regulatory Implications

The proposed changes, particularly Proposal 4 concerning amendments that could affect the Trust's grantor trust status, introduce potential regulatory risks. While the Sponsor intends to obtain legal opinions, any shift in tax classification could lead to increased scrutiny from tax authorities and impact investor tax reporting.

What Investors Should Do

1. Review the four proposals carefully.
2. Submit a written objection if you oppose any proposal.
3. Consider the Sponsor's recommendation to vote 'FOR' all proposals.

Key Dates

• 2018-12-04: Original Trust Agreement Date — Established the initial framework for the Grayscale Stellar Lumens Trust (GXLM).
• 2019-01-11: Amendment No. 1 to Trust Agreement — Modified the initial Trust Agreement.
• 2022-06-28: Amendment No. 2 to Trust Agreement — Further amended the Trust Agreement.
• 2024-03-22: Amendment No. 3 to Trust Agreement — Most recent prior amendment to the Trust Agreement before this solicitation.
• 2025-09-25: Record Date — Determined the shareholders eligible to vote on the proposed amendments.
• 2025-10-15: Expiration Date (tentative) — Deadline for shareholders to object to the proposed amendments; failure to object is deemed consent.

Glossary

Basket

A unit of creation or redemption for the Trust's shares, typically comprising a specific amount of the underlying asset (Stellar Lumens) and a corresponding number of Trust shares. (Proposal 1 seeks to allow Baskets to be created and redeemed using cash, which is a significant operational change.)

Sponsor

Grayscale Investments Sponsors, LLC, the entity responsible for managing and operating the Grayscale Stellar Lumens Trust. (The Sponsor is proposing the amendments and recommends shareholders vote 'FOR' them.)

Trust Estate

The assets held by the Trust, which in this case is primarily Stellar Lumens (XLM). (Proposal 3 allows a portion of the Trust Estate to be held in omnibus accounts to facilitate prime brokerage services.)

Authorized Participant

An entity (typically a financial institution) that has entered into an agreement with the Trust to facilitate the creation and redemption of Baskets. (Proposal 1 involves Authorized Participants in the new cash creation and redemption process.)

Grantor Trust

A type of trust where the income and deductions are passed through directly to the beneficiaries (shareholders) for U.S. federal income tax purposes, avoiding entity-level taxation. (Proposal 4 allows amendments that could potentially affect the Trust's grantor trust status, a key feature for investors.)

Omnibus Account

An account held by a prime broker that aggregates assets from multiple clients, allowing for streamlined trading and settlement. (Proposal 3 aims to utilize omnibus accounts for operational efficiency.)

Year-Over-Year Comparison

This filing is a Consent Solicitation Statement, not a traditional annual report (like a 10-K or 20-F), and therefore does not contain comparative financial data such as revenue, net income, or margins from a prior year. The focus is on proposed operational and governance changes to the Grayscale Stellar Lumens Trust (GXLM), rather than historical financial performance.

Filing Documents

• xlm_def_14a.htm (DEF 14A) — 1035KB
• img66344222_0.jpg (GRAPHIC) — 496KB
• img66344222_1.jpg (GRAPHIC) — 418KB
• 0001193125-25-217463.txt ( ) — 2295KB

From the Filing

DEF 14A 1 xlm_def_14a.htm DEF 14A DEF 14A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material under 240.14a-12 GRAYSCALE STELLAR LUMENS TRUST (XLM) SPONSORED BY GRAYSCALE INVESTMENTS SPONSORS, LLC (Name of Registrant as Specified In Its Charter) N/A ((Name of Person(s) Filing Proxy Statement, if other than the Registrant)) Payment of Filing Fee (Check all boxes that apply): No fee required. Fee paid previously with preliminary materials. Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. Grayscale Investments Sponsors, LLC 290 Harbor Drive, 4th Floor Stamford, Connecticut 06902 September 25, 2025 Dear Shareholder: On behalf of Grayscale Investments Sponsors, LLC, the sponsor (the “Sponsor”) of Grayscale Stellar Lumens Trust (XLM) (the “Trust” or “GXLM”), I would like to thank you for being a GXLM investor. I would like to call your attention to the four proposals we are putting forth in the attached Consent Solicitation Statement . We are extremely proud of the past success of the Trust, and we look forward to improving the product for all current and future investors. The following is a summary of the four proposals contained in the attached Consent Solicitation Statement: • Providing the Trust with alternative procedures for the creation and redemption of Baskets – This proposal will allow the Sponsor to cause the Trust, subject to compliance with certain requirements, to create and redeem Baskets in exchange for the receipt or delivery of cash, respectively, from or to an Authorized Participant. We believe this proposal will provide operational efficiencies that are beneficial to the Sponsor and the Trust. • Providing that the Sponsor’s Fee be payable to the Sponsor daily in arrears – Currently, the Trust Agreement provides that the Sponsor’s Fee is payable to the Sponsor monthly in arrears, and the Sponsor has discretion regarding when it will instruct the Custodian to withdraw XLM from the XLM Account equal to the accrued but unpaid Sponsor’s Fee. With the changes we are seeking, the Sponsor’s Fee would be payable daily in arrears and the Sponsor will maintain the discretion to instruct the Custodian to withdraw XLM from the XLM Account equal to the accrued but unpaid Sponsor’s Fee. • Permitting a portion of the Trust Estate to be held from time to time in one or more omnibus accounts in order to facilitate the creation and redemption of Shares – This proposal will allow the Trust to utilize the prime brokerage services of an affiliate of the Custodian. • Providing the Sponsor with the ability to make (i) certain restatements, amendments or supplements to the Trust Agreement that would materially adversely affect the interests of the shareholders as determined by the Sponsor in its sole discretion with a 20-day notice to shareholders and (ii) certain other restatements, amendments or supplements to the Trust Agreement only if certain conditions set forth in the amendments relating to the qualification of the Trust as a grantor trust for U.S. federal income tax purposes are satisfied – Currently, the Trust Agreement provides that any amendment to the Trust Agreement which materially adversely affects the interests of the shareholders shall occur only upon the vote of shareholders holding Shares equal to at least a majority (over 50%) of the Shares (not including Shares held by the Sponsor and its Affiliates) with shareholders having been deemed to have consented to the amendment if no objections were made after twenty (20) calendar days of receipt of notice. This proposal will allow the Sponsor to make restatements, amendments or supplements to the Trust Agreement in its sole discretion and without shareholder consent; provided that any restatement, amendment or supplement to the Trust Agreement which materially adversely affects the interests of the shareholders as determined by the Sponsor in its sole discretion shall not be effective any earlier than twenty (20) calendar days after receipt by the affected shareholders of a notice provided by the Sponsor with respect to any such restatement, amendment or supplement. In addition, the Trust Agreement prevents the Sponsor from making any restatement, amendment or supplement to the Trust Agreement that adversely affects the status of the Trust as a grantor trust for U.S. federal income tax purposes. This proposal will allow the S

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