Grayscale BCH Trust Seeks Sweeping Operational, Governance Changes

TL;DR

**Grayscale is consolidating power, making it easier to change the rules on BCHG investors without their explicit say, but it might streamline operations.**

AI Summary

Grayscale Bitcoin Cash Trust (BCHG) is seeking shareholder consent for four key proposals to modernize its operations and align with similar investment products. Proposal 1 introduces alternative cash creation and redemption procedures for Baskets, aiming for operational efficiencies. Proposal 2 changes the Sponsor's Fee payment frequency from monthly to daily in arrears, though the total fee amount remains unchanged. Proposal 3 allows the Trust Estate to use omnibus accounts and prime brokerage services from a Custodian affiliate to facilitate share creation and redemption. Most significantly, Proposal 4 grants the Sponsor sole discretion to amend the Trust Agreement, even if materially adverse to shareholders, with a 20-day notice period, and allows amendments affecting grantor trust status under specific counsel opinion conditions. This aims to reduce consent solicitation expenses and improve administrative convenience, positioning BCHG to maintain parity with other investment vehicles.

Why It Matters

These proposals represent a significant shift in governance and operational flexibility for Grayscale Bitcoin Cash Trust, potentially impacting investor protections and the Trust's competitive standing. Granting the Sponsor sole discretion to amend the Trust Agreement, even with a 20-day notice, reduces shareholder influence and could lead to changes materially adverse to their interests without explicit consent. The introduction of cash creation/redemption and prime brokerage services could enhance liquidity and efficiency, making BCHG more competitive against other crypto investment vehicles. For employees and customers, these changes streamline operations, but the reduced shareholder oversight in Proposal 4 could raise concerns about corporate governance standards in the evolving digital asset market.

Risk Assessment

Risk Level: high — The risk level is high primarily due to Proposal 4, which allows Grayscale Investments Sponsors, LLC to amend the Trust Agreement in its sole discretion, even if materially adversely affecting shareholders, with only a 20-day notice. This significantly reduces shareholder control compared to the current requirement of over 50% shareholder vote for such amendments, concentrating power with the Sponsor.

Analyst Insight

Investors should carefully review Proposal 4, as it significantly alters shareholder rights. Consider voting 'AGAINST' Proposal 4 if you prioritize maintaining shareholder consent for material changes. Otherwise, be aware that a failure to object by October 15, 2025, will be deemed a 'FOR' vote, effectively ceding more control to the Sponsor.

Key Numbers

• 47,123,300 — Shares outstanding (As of the Record Date, September 25, 2025, each entitled to one vote.)
• 20 — Calendar days (Shareholders have 20 calendar days to object to proposals, otherwise they are deemed to consent.)
• October 15, 2025 — Expiration Date (Deadline for Broadridge Financial Solutions, Inc. to receive votes by 4:00 p.m. New York City time.)
• 50% — Majority of Shares (Each proposal requires consent from over 50% of outstanding Shares.)
• 100 — Shares per Basket (prior) (Prior block size for issuing Shares to Authorized Participants.)
• 10,000 — Shares per Basket (after) (New block size for issuing Shares after adoption of Additional Amendments.)
• 212-668-1427 — Sponsor contact number (Phone number for shareholder inquiries to Grayscale Investments Sponsors, LLC.)
• March 1, 2018 — Original Trust Agreement date (Date of the Amended and Restated Declaration of Trust and Trust Agreement.)
• January 26, 2018 — Trust formation date (Date Grayscale Bitcoin Cash Trust was formed under Delaware Statutory Trust Act.)
• 4 — Number of proposals (Total number of proposals Grayscale is seeking shareholder consent for.)

Key Players & Entities

• Grayscale Bitcoin Cash Trust (BCH) (company) — Registrant and Trust seeking amendments
• Grayscale Investments Sponsors, LLC (company) — Sponsor of the Trust and party soliciting consent
• Edward McGee (person) — Chief Financial Officer of Grayscale Investments Sponsors, LLC
• CSC Delaware Trust Company (company) — Trustee of the Grayscale Bitcoin Cash Trust
• Grayscale Securities, LLC (company) — Marketing Agent for the Trust
• Coinbase Custody Trust Company, LLC (company) — Custodian for the Trust
• Depository Trust Company (DTC) (company) — Holds global certificates for BCHG Shares
• Cede & Co. (company) — Nominee for DTC, registered holder of global certificates
• Broadridge Financial Solutions, Inc. (company) — Receives shareholder votes for the consent solicitation
• Bitcoin Cash Network (other) — Decentralized network underlying BCH digital assets

FAQ

Risk Factors

• Sponsor's Unilateral Amendment Power [high — legal]: Proposal 4 grants the Sponsor sole discretion to amend the Trust Agreement, even if materially adverse to shareholders, with only a 20-day notice period. This significantly reduces shareholder control and could lead to unfavorable changes without adequate recourse.
• Changes to Basket Creation/Redemption [medium — operational]: Proposal 1 introduces alternative cash-based creation and redemption procedures for Baskets, moving from the prior 100 shares per Basket to a new 10,000 shares per Basket. While intended for efficiency, these changes could alter the liquidity and trading dynamics of the Trust's shares.
• Grantor Trust Status Amendments [medium — regulatory]: Proposal 4 allows amendments that could adversely affect the Trust's grantor trust status for U.S. federal income tax purposes, provided an opinion of counsel is obtained. This introduces uncertainty regarding the tax treatment for shareholders.
• Use of Omnibus Accounts [low — operational]: Proposal 3 permits the Trust Estate to be held in omnibus accounts and utilize prime brokerage services from a Custodian affiliate. This could introduce counterparty risk and reduce transparency in the holding of Trust assets.
• Daily Sponsor Fee Payment [low — operational]: Proposal 2 changes the Sponsor's Fee payment from monthly to daily in arrears. While the total fee amount remains unchanged, this alters the cash flow mechanics and administrative processes for fee collection.

Industry Context

The Grayscale Bitcoin Cash Trust (BCHG) operates within the digital asset investment product sector. This sector is characterized by evolving regulatory landscapes and increasing demand for regulated investment vehicles. Competitors include other trusts and ETFs offering exposure to various cryptocurrencies, all vying for investor capital and seeking operational efficiencies to remain competitive.

Regulatory Implications

The proposed amendments, particularly Proposal 4 regarding the Sponsor's ability to unilaterally amend the Trust Agreement and potentially alter grantor trust status, could introduce new regulatory uncertainties. Shareholders may face changes in tax treatment or governance without direct consent, necessitating careful monitoring of any future amendments and counsel opinions.

What Investors Should Do

1. Vote 'FOR' all four proposals by October 15, 2025, to support the modernization and operational efficiencies of BCHG, as recommended by the Sponsor.
2. Carefully review the implications of Proposal 4, which grants the Sponsor significant power to amend the Trust Agreement, including potentially adverse changes and alterations to grantor trust status, and consider the associated risks.
3. Contact Grayscale Investments Sponsors, LLC at (212) 668-1427 or info@grayscale.com if you have questions or need assistance with voting.
4. Be aware that failure to object in writing within 20 days of receiving the solicitation statement will be deemed consent to all proposals.

Key Dates

• 2025-09-25: Record Date — Determines shareholders eligible to vote on the proposed amendments. 47,123,300 shares were outstanding on this date.
• 2025-10-15: Expiration Date — Deadline for shareholders to return written consents by 4:00 p.m. NYC time. This is the 20th calendar day after the solicitation statement date.
• 2018-03-01: Original Trust Agreement Date — The initial date of the Amended and Restated Declaration of Trust and Trust Agreement, which is now being further amended.
• 2018-01-26: Trust Formation Date — The date Grayscale Bitcoin Cash Trust was formed under the Delaware Statutory Trust Act.

Glossary

Basket

A block of shares of the Trust that Authorized Participants can create or redeem. The size is proposed to change from 100 shares to 10,000 shares. (Key unit for creation and redemption processes, impacting operational efficiency and liquidity.)

Authorized Participant

An entity that has entered into an agreement with the Trust to facilitate the creation and redemption of Baskets of the Trust's shares. (Crucial intermediary for the Trust's share creation and redemption mechanism.)

Sponsor's Fee

The fee paid to Grayscale Investments Sponsors, LLC for its services as the sponsor of the Trust. Proposed to be payable daily in arrears instead of monthly. (Represents a cost to the Trust and impacts the Sponsor's cash flow management.)

Trust Estate

The assets held by the Trust, which in this case is Bitcoin Cash (BCH). (The underlying asset managed by the Trust, subject to proposed changes in holding structure.)

Grantor Trust

A type of trust where the grantor retains certain powers or benefits, often allowing for pass-through tax treatment without entity-level taxation. (The Trust's current tax status, which Proposal 4 could potentially alter.)

Omnibus Account

An account held by a broker or custodian that contains the securities of multiple clients, rather than individual accounts for each client. (Proposed to be used for holding a portion of the Trust Estate to facilitate share creation/redemption, potentially impacting asset segregation and risk.)

Year-Over-Year Comparison

This filing is a consent solicitation statement seeking shareholder approval for operational and governance changes, not a financial performance report compared to a prior period. Therefore, direct comparisons of revenue, margins, or net income are not applicable. The key changes focus on modernizing trust operations, including basket creation/redemption, fee payment, asset holding, and sponsor amendment powers, rather than reporting on past financial results.

Filing Documents

• bch_def_14a.htm (DEF 14A) — 1015KB
• img207737708_0.jpg (GRAPHIC) — 480KB
• img207737708_1.jpg (GRAPHIC) — 416KB
• 0001193125-25-217457.txt ( ) — 2250KB

From the Filing

DEF 14A 1 bch_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 BITCOIN CASH TRUST (BCH) 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 Bitcoin Cash Trust (BCH) (the “Trust” or “BCHG”), I would like to thank you for being a BCHG 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 BCH from the BCH 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 BCH from the BCH 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 Spons