Grayscale Crypto 5 ETF Swings to Profit Amidst Redemptions

TL;DR

**GDLC's new redemption program is a game-changer, driving massive realized gains and making it a more liquid, attractive crypto play.**

AI Summary

Grayscale CoinDesk Crypto 5 ETF (GDLC) reported a net increase in net assets from operations of $108.109 million for the three months ended September 30, 2025, a significant turnaround from a net decrease of $20.353 million in the same period of 2024. This was primarily driven by a net realized gain of $128.667 million on digital assets sold for redemption of Shares, a new activity following the SEC's approval of a redemption program on September 18, 2025. The Fund's total net assets decreased by $36.587 million to $740.635 million as of September 30, 2025, from $777.222 million at June 30, 2025, largely due to net capital share redemptions totaling $144.696 million. The Manager's Fee, a related party expense, increased to $4.972 million from $3.135 million year-over-year. The portfolio composition shifted, with Bitcoin's share of net assets decreasing from 79.83% to 73.69%, while Ether increased from 11.33% to 16.26%. The Fund also saw a net change in unrealized appreciation on digital assets of -$21.466 million for the quarter.

Why It Matters

This filing reveals a pivotal shift for GDLC, moving from a trust structure to an ETF with an active redemption program, which significantly impacts liquidity and price discovery for investors. The $128.667 million in realized gains from redemptions indicates strong investor activity post-Uplisting Date, suggesting increased demand for direct crypto exposure via regulated products. For employees, this signals Grayscale's continued expansion and adaptation in the competitive digital asset management space. Customers benefit from enhanced liquidity and potentially tighter tracking of underlying asset values. The broader market sees Grayscale's strategic move to compete more directly with other spot crypto ETFs, potentially intensifying competition and driving innovation in product offerings.

Risk Assessment

Risk Level: medium — The Fund's net assets decreased by $36.587 million, and it experienced a net decrease of 2,620,000 Shares outstanding due to redemptions, indicating potential capital outflow. While the new redemption program offers liquidity, the net change in unrealized appreciation on digital assets was a negative $21.466 million, highlighting the inherent volatility and market risk of its underlying crypto assets.

Analyst Insight

Investors should monitor GDLC's net asset value and share price closely, as the new redemption mechanism should lead to tighter tracking of its underlying digital assets. Consider GDLC for diversified crypto exposure, but be aware of the inherent volatility of digital assets and the impact of large redemptions on the fund's asset base.

Financial Highlights

debt To Equity

N/A

revenue

$108.109M

operating Margin

N/A

total Assets

$740.635M

total Debt

$0

net Income

$108.109M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $108.109M — Net increase in net assets from operations (Significant turnaround from -$20.353M in Q3 2024)
• $740.635M — Total net assets (As of September 30, 2025, down from $777.222M at June 30, 2025)
• $128.667M — Net realized gain on digital assets sold for redemption of Shares (New revenue stream following the launch of the redemption program)
• $144.696M — Net decrease in net assets from capital share transactions (Primarily due to redemptions of Shares)
• 13,247,400 — Shares outstanding (As of September 30, 2025, a decrease of 2,620,000 Shares)
• $4.972M — Manager's Fee expense (Increased from $3.135M in Q3 2024)
• 73.69% — Percentage of net assets in Bitcoin (Decreased from 79.83% at June 30, 2025)
• 16.26% — Percentage of net assets in Ether (Increased from 11.33% at June 30, 2025)
• -$21.466M — Net change in unrealized appreciation on digital assets (Reflects market volatility of underlying assets)
• $55.91 — Principal Market NAV per Share (As of September 30, 2025, up from $48.98 at June 30, 2025)

Key Players & Entities

• Grayscale CoinDesk Crypto 5 ETF (company) — registrant of the 10-Q filing
• Grayscale Investments Sponsors, LLC (company) — sole remaining manager of the Fund
• SEC (regulator) — approved the Rule 19b-4 application for listing Shares
• NYSE Arca, Inc. (company) — exchange where GDLC shares began trading on September 19, 2025
• Coinbase, Inc. (company) — prime broker of the Fund
• The Bank of New York Mellon (company) — transfer agent and administrator for the Fund
• Bitcoin (company) — largest holding in the Fund's portfolio at 73.69% of net assets
• Ether (company) — second largest holding in the Fund's portfolio at 16.26% of net assets
• Digital Currency Group, Inc. (company) — parent company of the Manager
• CoinDesk Indices, Inc. (company) — Index Provider for the CoinDesk 5 Index

FAQ

Risk Factors

• Digital Asset Price Volatility [high — market]: The net change in unrealized appreciation on digital assets was -$21.466 million for the three months ended September 30, 2025. This reflects the inherent volatility of the underlying digital assets held by the ETF, which can significantly impact the fund's net asset value.
• Redemption Program Impact [medium — regulatory]: The introduction of a redemption program on September 18, 2025, led to a net realized gain of $128.667 million but also resulted in net capital share redemptions of $144.696 million. The sustainability and market impact of this program are key considerations.
• Manager's Fee Increase [low — operational]: The Manager's Fee, a related party expense, increased to $4.972 million from $3.135 million year-over-year. While not a direct risk to asset value, it impacts the fund's net performance and investor returns.
• Portfolio Composition Shift [medium — market]: Bitcoin's share of net assets decreased from 79.83% to 73.69%, while Ether's share increased from 11.33% to 16.26%. This shift indicates a strategic change or market-driven rebalancing, exposing the fund to different performance drivers.

Industry Context

The cryptocurrency ETF market is rapidly evolving, with regulatory approvals for redemption programs introducing new operational dynamics. Grayscale CoinDesk Crypto 5 ETF (GDLC) is navigating this landscape by leveraging its new redemption facility, which has significantly boosted realized gains. However, the broader market remains subject to the inherent volatility of digital assets, influencing unrealized gains/losses and portfolio composition.

Regulatory Implications

The SEC's approval of a redemption program for GDLC marks a significant development, allowing for in-kind redemptions and potentially improving liquidity. However, the increased redemptions ($144.696 million) highlight investor sentiment and the potential for further outflows, which could impact fund size and management strategies.

What Investors Should Do

1. Monitor the impact of the redemption program on net assets and share count: The $144.696 million in net redemptions indicates significant investor activity; track if this trend continues.
2. Analyze the shift in portfolio composition: The decrease in Bitcoin's allocation (79.83% to 73.69%) and increase in Ether (11.33% to 16.26%) suggests a strategic or market-driven change; understand the rationale and future implications.
3. Evaluate the sustainability of realized gains: The $128.667 million gain from redemptions is a one-time event tied to the program's launch; assess future performance drivers beyond this initial impact.
4. Consider the impact of unrealized losses: The -$21.466 million change in unrealized appreciation highlights market risk; assess the fund's ability to manage volatility.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a net increase in net assets from operations of $108.109 million and total net assets of $740.635 million.
• 2025-09-18: SEC Approval of Redemption Program — Enabled the fund to offer redemptions, leading to a significant net realized gain of $128.667 million but also substantial share redemptions.
• 2025-06-30: End of Q2 2025 — Previous reporting period, with total net assets of $777.222 million and a net decrease in net assets from operations of $20.353 million in the prior year's comparable quarter.

Glossary

Net assets

The total value of the fund's assets minus its liabilities. For an ETF, this represents the total value of all shares outstanding. (Indicates the overall size and value of the fund, which decreased from $777.222 million to $740.635 million.)

Net realized gain on investments in digital assets sold for redemption of Shares

Profit made from selling digital assets specifically to fulfill requests from shareholders to redeem their shares in the ETF. (A new and significant source of gain ($128.667 million) for the fund in Q3 2025 due to the new redemption program.)

Net change in unrealized appreciation on investments in digital assets

The change in value of the fund's digital asset holdings that have not yet been sold. It reflects market fluctuations. (Shows the impact of market volatility on the fund's holdings, resulting in a loss of $21.466 million for the quarter.)

Principal Market NAV per Share

The Net Asset Value (NAV) per share calculated based on the primary market where the ETF is traded. (Shows the per-share value of the fund, which increased from $48.98 to $55.91, indicating growth in value per share despite overall net asset decrease.)

Shares issued and outstanding

The total number of shares of the ETF that have been issued by the fund and are currently held by investors. (Decreased from 15,867,400 to 13,247,400, primarily due to redemptions, impacting the per-share metrics.)

Year-Over-Year Comparison

Compared to the prior year's comparable quarter (Q3 2024), GDLC has shown a dramatic turnaround in its operational results, moving from a net decrease in net assets of $20.353 million to a net increase of $108.109 million. This shift is primarily driven by the newly implemented redemption program, which generated a substantial $128.667 million in realized gains. However, total net assets have decreased by $36.587 million due to significant redemptions, and the Manager's Fee has increased by approximately 58.6% year-over-year, impacting overall profitability.

Filing Documents

• gdlc-20250930.htm (10-Q) — 2474KB
• gdlc-ex31_1.htm (EX-31.1) — 25KB
• gdlc-ex31_2.htm (EX-31.2) — 25KB
• gdlc-ex32_1.htm (EX-32.1) — 8KB
• gdlc-ex32_2.htm (EX-32.2) — 8KB
• img243244352_0.jpg (GRAPHIC) — 1196KB
• img243244352_1.jpg (GRAPHIC) — 1156KB
• img243244352_2.jpg (GRAPHIC) — 517KB
• img243244352_3.jpg (GRAPHIC) — 678KB
• img243244352_4.jpg (GRAPHIC) — 411KB
• 0001193125-25-266921.txt ( ) — 16853KB
• gdlc-20250930.xsd (EX-101.SCH) — 578KB
• gdlc-20250930_htm.xml (XML) — 1700KB

Forward-Looking Statements

Forward-Looking Statements 3 Industry and Market Data 3

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Statements of Assets and Liabilities at September 30, 2025 and June 30, 2025 4 Schedules of Investments at September 30, 2025 and June 30, 2025 5 Statements of Operations for the Three Months Ended September 30, 2025 and 2024 6 Statements of Changes in Net Assets for the Three Months Ended September 30, 2025 and 2024 7 Statement of Cash Flows for the Three Months Ended September 30, 2025 8 Notes to the Unaudited Financial Statements 9 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A.

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 3. Defaults Upon Senior Securities 41 Item 4. Mine Safety Disclosures 41 Item 5. Other Information 41 Item 6. Exhibits 42 GLOSSARY OF DEFINED TERMS 43

SIGNATURES

SIGNATURES 50 2 Forw ard-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale CoinDesk Crypto 5 ETF (the "Fund"). 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 Quarterly 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 Fund's operations, the plans of Grayscale Investments, LLC ("GSI"), the manager of the Fund before January 1, 2025, Grayscale Operating, LLC ("GSO"), the co-manager of the Fund from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC ("GSIS"), the co-manager of the Fund from January 1, 2025 to May 3, 2025 and the sole remaining manager thereafter (each of GSI, GSO and GSIS, the "Manager", as the context may require, and GSO and GSIS, together, the "Co-Managers"), and references to the Fund'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 Manager 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 Manager's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those des

– FINANCI AL INFORMATION

PART I – FINANCI AL INFORMATION:

Financial St atements (Unaudited)

Item 1. Financial St atements (Unaudited) GRAYSCALE COINDESK CRYPTO 5 ETF STATEMENTS OF ASSET S AND LIABILITIES (UNAUDITED) ( Amounts in thousands, except Share and per Share amounts) September 30, 2025 June 30, 2025 Assets: Investments in digital assets, at fair value (cost $ 113,531 and $ 128,652 as of September 30, 2025 and June 30, 2025, respectively) $ 740,635 $ 777,222 Total assets $ 740,635 $ 777,222 Liabilities: Manager's Fee payable, related party $ - $ - Total liabilities - - Net assets $ 740,635 $ 777,222 Shares issued and outstanding, no par value (unlimited Shares authorized) 13,247,400 15,867,400 Principal Market NAV per Share $ 55.91 $ 48.98 See accompanying notes to the unaudited financial statements. 4 GRAYSCALE COINDESK CRYPTO 5 ETF SCHEDULES OF INVESTMENTs (UNAUDITED) ( Amounts in thousands, except quantity of each Fund Component and percentages) September 30, 2025 Quantity Cost Fair Value % of Net Assets Investment in Bitcoin 4,770.41691208 $ 62,937 $ 545,745 73.69 % Investment in Ether 28,941.64709820 15,396 120,444 16.26 % Investment in XRP 14,176,112.751801 9,233 40,543 5.47 % Investment in SOL 129,020.18150104 16,290 26,955 3.64 % Investment in ADA 8,670,851.304897 9,675 6,948 0.94 % Total Investments $ 113,531 $ 740,635 100.00 % Net assets $ 740,635 100.00 % June 30, 2025 Quantity Cost Fair Value % of Net Assets Investment in Bitcoin 5,757.74321433 $ 70,994 $ 620,419 79.83 % Investment in Ether 35,007.73089383 17,524 88,088 11.33 % Investment in XRP 16,870,769.902426 10,165 39,140 5.04 % Investment in SOL 148,399.95605973 18,288 23,417 3.01 % Investment in ADA 10,440,402.251514 11,681 6,158 0.79 % Total Investments $ 128,652 $ 777,222 100.00 % Net assets $ 777,222 10