10-K: Grayscale Crypto Fund Reports Significant Losses

Grayscale CoinDesk Crypto 5 ETF experienced a substantial net decrease in assets for the fiscal year ended June 30, 2026, primarily driven by unrealized losses on its digital asset holdings.

Summary

• The Grayscale CoinDesk Crypto 5 ETF (the Fund) reported a net decrease in net assets of $253,784,000 for the year ended June 30, 2026, a significant decline from the previous year's increase.
• This decrease was largely due to a net realized and unrealized loss on investments in digital assets totaling $246,703,000.
• The Fund's net assets decreased by 60% to $308,960,000 as of June 30, 2026, from $777,222,000 at June 30, 2025.
• The decrease in net assets was attributed to overall price depreciation of Fund Components, redemptions of digital assets, and withdrawals to pay the Manager's Fee, partially offset by contributions from Share creations.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to significant unrealized losses on digital asset investments and a substantial decrease in net assets for the fiscal year ended June 30, 2026.

Positives

• The Fund successfully completed its quarterly rebalancing in accordance with the CD5 Methodology.
• The Fund's Shares commenced trading on NYSE Arca on September 19, 2025, with an ongoing redemption program.
• The Manager's Fee was reduced to 0.59% effective September 19, 2025.
• The Fund's principal market determination process for digital assets is based on volume, activity, and price stability, adhering to AML/KYC regulations.

Negatives

• The Fund experienced a net realized and unrealized loss of $246,703,000 on its digital asset investments for the year ended June 30, 2026.
• Net assets decreased by 60% to $308,960,000 as of June 30, 2026.
• Significant redemptions of digital assets totaling $338,021,000 occurred during the year.
• The Fund's holdings are highly concentrated in Bitcoin and Ether, making it sensitive to price declines in these assets.

Risks

• Extreme volatility in digital asset prices, including Fund Components, could materially affect the value of the Shares, potentially leading to a loss of all or substantially all of their value.
• The Fund's reliance on third-party service providers (Custodian, Prime Broker, Authorized Participants) poses risks if these providers experience business failures, security breaches, or operational problems.
• Changes in U.S. or foreign laws and regulations concerning digital assets could prohibit or restrict their use, increasing costs, impairing operations, or requiring termination of the Fund.
• The lack of ability to facilitate in-kind creations and redemptions of Shares currently could lead to the Shares trading at premiums or discounts to Net Asset Value (NAV).
• Potential conflicts of interest exist among the Manager, its affiliates, and the Fund, which could permit them to favor their own interests to the detriment of the Fund and its shareholders.
• The Fund's concentration in Bitcoin and Ether makes it vulnerable to significant price drops in these specific digital assets.
• Security threats to the Fund's digital assets held in custody could result in operational halts, loss of assets, and damage to the Fund's reputation.
• The uncertain U.S. federal income tax treatment of digital assets could lead to adverse tax consequences for investors.

Future Outlook

The filing does not provide specific forward-looking financial guidance. However, it highlights the inherent volatility of digital assets and the associated risks, suggesting that future performance will be heavily influenced by market conditions and regulatory developments.

Management Comments

• The Manager believes that the Index Provider's selection process for Constituent Trading Platforms and the methodology of the Index Price algorithm provide a more accurate picture of Fund Component price movements than a simple average of Digital Asset Trading Platform spot prices.
• The Manager expects that the Fund will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period.
• The Manager has sole discretion to replace the CD5 with a different Large Cap index and sole discretion to replace the Index Provider with a different Large Cap index provider.

Industry Context

StockSavvy.ai notes that this filing reflects the ongoing volatility and evolving regulatory landscape within the digital asset industry. The Fund's performance is directly tied to the performance of its underlying digital assets, which are subject to significant market fluctuations and regulatory scrutiny.

Comparison to Industry Standards

• The Fund's investment objective is to track the CoinDesk 5 Index (CD5), which comprises large-cap digital assets.
• The Fund's methodology for selecting digital assets for inclusion in its portfolio is based on market capitalization, liquidity, and data availability, aligning with common practices for index-based digital asset funds.
• The Fund's reliance on third-party custodians like Coinbase Custody Trust Company is standard practice in the digital asset fund industry for security and operational efficiency.
• The Fund's NAV calculation methodology, using a volume-weighted average price from selected digital asset trading platforms, is a common approach to mitigate the impact of price manipulation and volatility on individual exchanges.

Legal Proceedings

• Genesis Capital and Genesis Asia Pacific Pte. Ltd. filed a complaint against Digital Currency Group, Inc. (DCG) and its affiliates alleging preferential transfers prior to Genesis Capital's bankruptcy filing. GSO believes the lawsuit is without merit and intends to defend against it.

Related Party Transactions

• The Fund pays a Manager's Fee to Grayscale Investments Sponsors, LLC (the Manager), calculated as 0.59% of the aggregate value of the Fund's digital asset holdings.
• Digital Currency Group, Inc. (DCG), the indirect parent of the Manager, holds 5.28% of the Fund's Shares as of August 31, 2026.
• DCG is also a minority interest holder in Kraken, one of the digital asset trading platforms included in the Index Price for certain Fund Components.

Stakeholder Impact

• Shareholders have experienced a significant decrease in the value of their investment due to market depreciation of digital assets.
• The concentration of holdings in Bitcoin and Ether means that declines in these assets will disproportionately affect shareholder value.
• Shareholders will not receive the benefits of any forks or airdrops, as the Fund irrevocably abandons such assets.
• The limited voting rights of shareholders and restricted ability to bring derivative actions mean that control largely rests with the Manager.

Next Steps

• The Manager will continue to rebalance the Fund's portfolio quarterly according to the CD5 Methodology.
• The Fund will continue to operate under its passive investment strategy, aiming to reflect the value of the digital assets in the CD5.
• The Manager will monitor the digital asset markets and regulatory landscape for any potential impacts on the Fund's operations or value.

Key Dates

Recommendation

While the Fund has experienced significant losses and faces considerable risks inherent to digital assets and regulatory uncertainty, its passive strategy aims to track a major digital asset index. The recent listing on NYSE Arca and the ongoing redemption program provide some liquidity. However, the substantial unrealized losses and concentration risk warrant a cautious 'hold' stance, pending market stabilization and clearer regulatory frameworks.

Keywords

Grayscale CoinDesk Crypto 5 ETF, GDLC, Digital Assets, Bitcoin, Ether, Solana, XRP, BNB