10-Q: Grayscale Bitcoin Cash Trust (BCH) Reports Increase in Net Assets for Q2 2025

Grayscale Bitcoin Cash Trust (BCH) reports a significant increase in net assets driven by Bitcoin Cash price appreciation and share creations for the quarter ended December 31, 2024.

Summary

• Grayscale Bitcoin Cash Trust (BCH) filed its Form 10-Q for the quarter ended December 31, 2024.
• The Trust's net assets increased by 36% during the quarter, reaching $169.758 million.
• This increase was primarily driven by Bitcoin Cash (BCH) price appreciation and the contribution of approximately 25,929 BCH through share creations.
• The Trust's investment objective is for the value of its shares to reflect the value of BCH held, less expenses.
• The Trust's shares are traded on the OTCQX Best Market under the symbol BCHG.
• The Sponsor's Fee is calculated as 2.5% of the aggregate value of the Trust's assets, less liabilities, and is paid monthly in arrears in BCH.
• As of December 31, 2024, each share represented approximately 0.0084 of one BCH.
• On January 1, 2025, Grayscale Investments, LLC merged with Grayscale Operating, LLC, and subsequently, Grayscale Investments Sponsors, LLC became the sole remaining sponsor of the Trust effective May 3, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the increase in net assets and BCH price appreciation. However, the risks associated with cryptocurrency investments and the ongoing litigation introduce some uncertainty.

Positives

• The Trust experienced a significant increase in net assets due to BCH price appreciation and share creations.
• The Trust's disclosure controls and procedures were deemed effective as of the end of the period covered by the report.
• The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

Negatives

• The Trust's shares have historically traded at both premiums and discounts to the value of BCH held by the Trust.
• The Trust is subject to various risks including market risk, liquidity risk, and other risks related to its concentration in a single asset, BCH.
• The Trust is not currently operating a redemption program and is not accepting redemption requests.

Risks

• The price of BCH is volatile and subject to influence by many factors.
• There is a risk that some or all of the Trust's BCH could be lost or stolen.
• The Trust relies on third-party service providers, and disruptions to their business operations could have an adverse impact.
• The Sponsor and the Trust may be subject to various litigation, regulatory investigations, and other legal proceedings.
• If BCH is determined to be a security, it may have material adverse consequences for BCH and the Trust.

Future Outlook

The Trust may operate a redemption program in the future, subject to regulatory approval and approval by the Sponsor, but currently has no intention of seeking regulatory approval to operate an ongoing redemption program.

Industry Context

This report provides insight into the performance of a digital asset investment vehicle in the context of the broader cryptocurrency market. The performance of the Trust is directly tied to the price of Bitcoin Cash, making it susceptible to the volatility inherent in the cryptocurrency market. The report also highlights the ongoing evolution of the regulatory landscape for digital assets, which could have a significant impact on the Trust and its operations.

Comparison to Industry Standards

• Grayscale Bitcoin Trust ETF (GBTC) and Grayscale Ethereum Trust ETF (ETHE) are comparable products that hold Bitcoin and Ethereum, respectively.
• Similar to BCHG, these trusts aim to provide investors with exposure to the price movements of the underlying digital assets.
• However, the performance of BCHG may differ from GBTC and ETHE due to the unique characteristics of Bitcoin Cash and the specific expenses and fees associated with each trust.
• Other comparable products include those offered by Bitwise, 21Shares, and VanEck.

Management Changes

Legal Proceedings

• Osprey Funds, LLC filed a suit against the Sponsor alleging violations of the Connecticut Unfair Trade Practices Act.
• The Sponsor believes the lawsuit is without merit and intends to vigorously defend against it.

Related Party Transactions

• The Trust pays a Sponsor's Fee to Grayscale, calculated as 2.5% of the aggregate value of the Trust's assets.
• As of December 31, 2024 and June 30, 2024, 940,312 and 589,898 Shares of the Trust were held by related parties of the Trust, respectively.
• DCG, the indirect parent company of the Sponsor, had an authorization to purchase up to $200 million worth of Shares of the Trust, but had not purchased any Shares as of December 31, 2024.

Stakeholder Impact

• Shareholders are exposed to the price volatility of Bitcoin Cash.
• The Sponsor is responsible for managing the Trust and ensuring compliance with regulations.
• The Custodian is responsible for safeguarding the Trust's BCH.
• Authorized Participants facilitate the creation and potential redemption of Shares.

Next Steps

• The Sponsor will continue to manage and administer the Trust.
• The Trust will continue to issue Creation Baskets in exchange for deposits of BCH.
• The Sponsor will continue to monitor the regulatory landscape and make adjustments as necessary.
• The Sponsor will vigorously defend against the lawsuit filed by Osprey Funds, LLC.

Key Dates

Keywords

Grayscale Bitcoin Cash Trust, Bitcoin Cash, BCHG, Digital Assets, Cryptocurrency, Trust, Sponsor, Net Assets, Financial Report, OTCQX