Grayscale Digital Large Cap Fund LLC 2025 Form 10-K and NYSE Arca Listing

Introduction

In 2025, Grayscale Digital Large Cap Fund LLC (“the Fund” or “GDLC”) stands as a pivotal player in the institutional digital asset investment landscape. As a Cayman Islands-based limited liability company and an affiliate of Grayscale Investments, GDLC provides accredited investors exposure to a curated basket of large-cap digital assets. The Fund’s recent release of its Form 10-K for the fiscal year ending June 30, 2025, announced a robust 47% year-over-year surge in net assets, reflecting the evolving appetite for digital assets and Grayscale’s dynamic fund management approach. At the same time, the Fund’s journey toward a public listing on NYSE Arca has navigated significant regulatory scrutiny, with the SEC’s decision currently stayed and under review. 2025 also marked the Fund’s transition from the CoinDesk Large Cap Select Index to the streamlined CoinDesk 5 Index, symbolizing a recalibration of its methodology in response to both regulatory and market developments. This comprehensive report analyzes the Fund’s financial performance as reported in its latest Form 10-K, explores the intricate regulatory landscape composing its NYSE Arca listing attempt, and assesses the implications of the index methodology switch by referencing authoritative and up-to-the-minute web sources.

Fund Structure and Cayman Islands Entity Overview

Legal Structure and Jurisdictional Advantages

The Grayscale Digital Large Cap Fund LLC is established as a limited liability company under the laws of the Cayman Islands, a globally respected jurisdiction for asset management structures—particularly those serving U.S. and international investors seeking tax neutrality and regulatory reliability. The Cayman Islands regime offers notable advantages: flexibility in fund formation, alignment with FATCA and CRS reporting requirements, and a reputation for robust, yet commercially pragmatic, anti-money laundering (AML) and know-your-customer (KYC) frameworks. Exempted companies, which are typical for open-ended and closed-ended strategies, dominate the landscape, providing operational advantages while conferring investor protection through established local legislation and recognized international standards¹.

Recently, key regulatory advances have addressed the treatment of tokenized investment interests. The Virtual Asset (Service Providers) (Amendment) Bill, 2025, continues to clarify the regulatory perimeter for tokenized funds—a rapidly growing segment where fund ownership is recorded digitally on blockchains. While the 2020 introduction of the VASP Act proactively governed virtual asset issuance and businesses, the blurred line between traditional securities and tokenized assets had presented compliance ambiguities, notably whether such vehicles fell under dual regulation. The 2025 amendments aim to alleviate these burdens, reaffirming the islands’ adaptation capabilities and spirit of innovation².

Operational Model and Investment Objective

GDLC operates as a passive investment vehicle managed and administered by the Manager, with no active officers or directors. The Fund's investment objective is for the value of its shares to approximate the value of its component digital assets, net of expenses and liabilities. Notably, GDLC does not make use of leverage, derivatives, or complex financial engineering. Shares are structured to offer institutional and sophisticated investors a cost-effective entry into digital assets, eliminating the complexities of direct acquisition, custody, and safekeeping of the underlying cryptographic keys³.

From an operational standpoint, the Fund issues Creation Baskets in exchange for deposits of Fund Components—essentially the basket of digital assets that currently make up the CoinDesk 5 Index. Shares, which are quoted on OTCQX, have at times traded at significant premiums and discounts to the Fund’s net asset value (NAV), indicating both strong demand and at times market dislocations typical of thinly traded securities or products lacking liquidity parity with underlying assets⁴.

Financial Performance: Insights from the 2025 Form 10-K

Key Metrics Summary

The Fund’s Form 10-K for the fiscal year ended June 30, 2025 highlights record growth in net assets, driven primarily by price appreciation among the Fund’s component digital assets and bolstered by periodic rebalancing gains. Below is a summary table of headline financial metrics:

Metric	Value (2025)	Value (2024)	Year-over-Year Change
Net Assets	$777M	$530M	+47%
Realized Gains	$5.2M	$2.1M	+148%
Unrealized Gains	$245.8M	$150.3M	+63.5%
Manager's Fees	$16.1M	$11.9M	+35.3%

Table Analysis

The year-over-year asset growth of 47% outpaces most traditional asset management benchmarks for 2025, reflecting the strong performance, especially of Bitcoin, Ether, and related top-cap coins during the period. The breakdown of realized and unrealized gains emphasizes that the overwhelming majority of value accrual for the year was attributable to marked-to-market appreciation rather than trading activities, solidifying the fund's passive, index-tracking philosophy. Manager’s fees constituted a manageable drag on performance, paid in-kind rather than as cash, consistent with sector standards⁵.

Financial Highlights and Market Dynamics

Net Asset Growth Drivers

GDLC’s net assets surged from roughly $530 million in June 2024 to $777 million by the end of June 2025. This increase was largely propelled by appreciation in the Fund’s digital asset holdings—principally Bitcoin, Ether, Solana, XRP, and Cardano. Realized gains, while present from the transfer of digital assets to pay management fees and through quarterly index rebalancing, were dwarfed by the outsized unrealized gains—particularly as the crypto market hit new all-time highs during parts of the reporting period⁵.

Fund Expenses and Fees

The Manager’s Fee, totaling approximately $16.1 million for the period, remained in line with sector norms and was paid by the transfer of Fund assets rather than through liquidity events or borrowing. This structure can, over time, produce subtle dilution for shareholders, but is offset by the Fund's broader appreciation in digital asset prices. The Fund’s fee structure and reliance on in-kind deductions are integral to preserving its alignment with investor interests and minimizing frictional costs³.

Share Performance and Premium/Discount Dynamics

Despite robust NAV growth, GDLC’s shares continue to experience trading at both premiums and discounts to NAV—as is typical in funds lacking the arbitrage mechanism of open-end ETFs. For the year ending August 2025, the Fund’s market price appreciated by approximately 165.87% and NAV by 81.11%, underscoring both the magnitude of the underlying rally and the volatility of market sentiment relative to purely mathematical NAV calculations⁴. Share premiums/discounts reflect investor sentiment, liquidity, and sometimes speculation about eventual ETF-style conversion or uplift from index adjustments.

Comparative Performance

When benchmarked against Grayscale’s other flagship products—for example, the Bitcoin Trust ETF (GBTC), which delivered a trailing one-year return of above 80% during the same period—the Digital Large Cap Fund’s NAV returns demonstrate the performance drag and diversification benefits inherent in a basket approach. This is consistent with the theory that including non-Bitcoin large-cap assets leads to slightly lower, but more balanced, performance profiles relative to single-asset trusts⁶.

Investor Reactions and Market Commentary

The release of the 10-K and supporting press materials was broadly seen as a validation of passive investment products in the digital asset space. Increases in net assets—especially when driven by organic asset appreciation as opposed to net inflows—serve as positive sentiment signals to both institutional and high-net-worth investor bases⁵.

Regulatory Updates: SEC Approval and NYSE Arca Listing Process

Timeline and Application Process

GDLC’s quest for public listing on NYSE Arca is emblematic of the evolving regulatory treatment of digital asset products. The Fund’s listing journey under NYSE Arca Rule 8.500-E, with procedural history extending well into 2024 and 2025, is summarized by a series of substantive events:

October 15, 2024: NYSE Arca files a rule change with the SEC to amend its rules and seek permission to list/trade GDLC shares⁷.
Multiple Extensions: The SEC, via delegated authority, extends the review period multiple times to accommodate complex public comments and evolving staff guidance⁸.
June 26, 2025: NYSE Arca submits Amendment No. 1, significantly revising the original proposal to align closely with SEC feedback and evolving industry standards⁷.
July 1, 2025: The SEC, by delegated authority, approves the listing proposal on an accelerated basis⁸.
July-August 2025: Following approval, a stay and subsequent review of the order is imposed due to further regulatory queries, industry feedback, and shifts in policy focus, as articulated in new Federal Register notices⁷.

Despite eventual approval, the listing remains stayed, making the Fund’s shares still untradeable on NYSE Arca as of September 2025. The Fund thus remains quoted solely on the OTCQX platform during the review period.

SEC, NYSE Arca, and the Regulatory Landscape

Evolving SEC Position on Digital Asset Funds

In 2025, the SEC, under the leadership of Chairman Paul S. Atkins, has prioritized regulatory clarity and innovation. Recent public statements and the published Spring 2025 regulatory agenda reinforce a commitment to clearer rules for the issuance, custody, and trading of digital assets—seeking to balance investor protection and capital formation⁹. This drive for clarity has had tangible impacts: the launch of cross-agency initiatives with the CFTC, new guidance on spot market trading, and targeted deregulatory proposals attempting to simplify fund disclosures and reduce compliance pain for asset managers.

SEC’s Crypto ETF and Trust Listing Reforms

2025 also witnessed significant industry and regulatory effort to streamline the listing of crypto ETFs and trust products. The Cboe BZX and NYSE Arca formal proposals urge the SEC to adopt “generic listing standards”—which, if approved, would eliminate the need for individual 19b-4 approval filings for each new crypto fund. The goal is to accelerate the pathway for exchange-traded products meeting standardized, risk-controlled eligibility criteria, thereby reducing bureaucratic delays and enhancing competitiveness amongst U.S. financial centers¹⁰.

Procedural Complexity for GDLC

Despite this deregulatory push, GDLC’s application was subjected to extensive review, reflecting the SEC staff’s ongoing caution. The fund’s structure as a Cayman-domiciled, primarily passive digital asset vehicle required careful assessment under both commodity and securities law frameworks. This scrutiny included discussion of investment trust definitions, underlying digital asset custody and valuation, governance, and index methodology. The extended review processes and risk assessments underscore the regulatory focus on preventing systemic risks, addressing market manipulation concerns, and ensuring suitability for retail and institutional investors alike.

Public Comments and Industry Feedback

The SEC’s process involved multiple rounds of public consultation. Notable themes from public comments included:

Concerns about the potential for manipulation in underlying spot crypto markets.
The need for robust surveillance sharing and anti-fraud mechanisms.
Industry-wide calls for “level playing field” treatment of crypto funds with traditional asset classes—especially as the White House task force released comprehensive policy documents supporting integration of crypto with mainstream finance¹⁰.

Current Status

As of September 2025, the Fund’s NYSE Arca listing remains stayed, with ongoing regulatory review. Market participants, however, generally expect eventual approval, encouraged by the SEC’s evolving collaborative tone and the momentum toward standardized rules for digital asset-backed ETFs.

Compliance and Cayman Islands Private Funds Regulation

GDLC is registered with the Cayman Islands Monetary Authority (CIMA) under the Private Funds Act. All private funds in the Cayman Islands are required to adhere to these regulations, which cover compulsory registration, valuation of assets, proper audits, and annual returns. The regulatory structure is designed to ensure both local and international investors are protected through transparency and oversight without subjecting these vehicles to onerous operational restrictions that might compromise innovation or capital attraction¹¹.

Further clarity has been sought through amendments to the VASP Act, particularly as digital asset funds incorporate more sophisticated features, such as tokenized units or smart contracts. The clarified regulatory posture is intended to avoid unnecessary double regulation under both the Private Funds Act and the VASP Act, ensuring high-quality innovation does not face excessive compliance drag, in turn supporting the Cayman Islands’ position as a leading offshore jurisdiction for digital asset funds².

Index Methodology Changes: Transition to the CoinDesk 5

Overview of the Index Switch

A major structural event for GDLC in 2025 was its transition, as of June 5, from tracking the CoinDesk Large Cap Select Index (DLCS) to the CoinDesk 5 Index (CD5). This decision was motivated by both market factors—such as evolving liquidity and asset eligibility profiles—and regulatory preferences for clearly defined index methodologies with tighter governance and less overlap with potentially contentious or illiquid assets¹².

CoinDesk 5 Index—Key Features:

Constituents: Strictly the five largest digital assets by market capitalization, drawn from the CoinDesk 20 universe.
Eligibility: Excludes stablecoins, memecoins, privacy/gas tokens, wrapped/staked/pegged assets to mitigate regulatory and operational risks.
Liquidity and Custody: Constituents must meet high trading volume and custody requirements, ensuring investability and institutional suitability.
Weighting: Market capitalization weighted using current circulating supply.
Rebalancing: Conducted quarterly, in line with CoinDesk 20 schedule, with buffer zones to minimize turnover and associated trading costs.
Calculation: Index is recalculated and published every five seconds, aiming for maximum market transparency and alignment with industry standards.

Implications for the Fund and Investors

Portfolio Impact

By adopting CD5, GDLC now offers exposure solely to Bitcoin, Ether, Solana, XRP, and Cardano (as of June 2025). This streamlines the fund’s composition, increases alignment with mainstream investing expectations, and, critically, enhances the fund's suitability for public market listing where liquidity and transparency are paramount. This transition has not only simplified monitoring of fund assets, but is also widely perceived as a step toward improved regulatory comfort and approval prospects for listing efforts¹².

Rebalancing and Reconstitution

Quarterly rebalancing ensures the fund’s constitution remains aligned with the index methodology, driving regular asset purchases and sales. Such rebalancing offers investors systematic exposure to sector evolutions—an essential feature in an industry where relative market capitalizations can shift dramatically within short periods. Inclusion/exclusion rules—such as avoiding stablecoins or memecoins—insulate the fund from contagion risk posed by potentially unstable or regulatory-sensitive assets¹².

Transparency and Industry Best Practices

The governance procedures for the index—including public methodology documents, oversight by CoinDesk Indices, and regular reviews—further support the fund’s case for listing under regulated platforms such as NYSE Arca. The move toward the CD5 is emblematic of a broader push for transparency and standardization in crypto asset management, seen as prerequisites for the next wave of institutional adoption.

Comparative Index Analysis

Relative to the replaced DLCS, the CD5 Index is narrower and more liquid, with stricter criteria, but may sacrifice some diversification. Feedback from market commentators and institutional analysts suggests the trade-off is modest, particularly as the five largest assets increasingly dominate sector-wide performance.

Comparative Performance vs. Benchmarks and Investor Perceptions

NAV Performance vs. Market Price:

Market Price Return (1 year to August 2025): ~166%
NAV Return (1 year to August 2025): ~81%

Such disparities reflect premium/discount volatility but also demonstrate the Fund’s ability to capture broad-based crypto market rallies, with somewhat less volatility than single-asset products like GBTC, itself up ~82% for the year, per Yahoo Finance data⁶.

Savings Compared to DIY Crypto Portfolios

For many investors, GDLC presents a streamlined alternative to assembling, rebalancing, and securing multiple coins—especially with respect to custody, which remains fraught with risks for the uninitiated.

Benchmarking and Peer Analysis

Even as NAV and market price returns are substantial, it is essential to note that the Fund has not always met its stated objective: shares have repeatedly traded at nontrivial premiums and discounts to NAV and performance has at times lagged single-asset benchmarks. This mismatch is typical of closed-end, non-ETF products during periods of market exuberance or pessimism, though the Fund’s relative performance and risk profile remain competitive with both direct crypto investing and legacy financial products offering synthetic exposure^{4, 5}.

Investor Reaction

Broadly, institutional and retail response to the 2025 10-K and accompanying press releases has been positive, pointing to:

Affirmation of crypto’s continued viability as an asset class.
Growing confidence in Grayscale and affiliated vehicles for delivering regulated, transparent exposure.
Enthusiasm for regulatory normalization, especially as the SEC/CFTC and global policymakers signal further acceptance of digital assets in formal financial structures^{13, 9}.

Broader Regulatory Environment: Crypto Funds in 2025

U.S. Policy Developments

2025 has proved pivotal for U.S. regulatory policy toward digital assets. Two major trends undergird the regulatory context for GDLC:

Coordination Between the SEC and CFTC: The SEC and CFTC released a joint statement in September 2025, clarifying pathways for registered exchanges to facilitate spot crypto product trading. This historic step embeds the principle of market participant choice, removes regulatory ambiguity for certain spot products, and demonstrates inter-agency cooperation after a period of policy divergence under previous leadership¹³.
Legislative and Policy Milestones: Key legislative advances included the signing of the GENIUS Act—establishing a national regulatory roadmap for stablecoins and digital assets—and the progress of the CLARITY Act in Congress, both mandating greater regulatory consistency and transparency for crypto funds. At the executive level, the President’s Working Group on Digital Assets advocated for SEC/CFTC rule changes to accelerate new crypto fund listings and eliminate delays posed by legacy, non-standardized approval processes¹³.
Exchange Reforms and Listing Standards: In July 2025, Cboe BZX, NYSE Arca, and Nasdaq all filed proposals for generic listing standards for crypto ETFs, aiming to do away with the lengthy 19b-4 individualized approval process. If adopted, this framework would facilitate faster market access for funds meeting risk, liquidity, and asset eligibility benchmarks, boosting the competitive advantages of U.S. marketplaces relative to overseas options¹⁴.
International Jurisdictional Dynamics: While the Cayman Islands continues to serve as a favored home for U.S. dollar-denominated crypto funds, global regulatory competition is intensifying, with Hong Kong, Singapore, and the British Virgin Islands each refining their frameworks for digital asset innovation and investor protection. The adaptability of Cayman’s legal system alongside its experience in AML/KYC compliance remains a draw, particularly as U.S. and EU fund managers weigh regulatory certainty, cost, and operational flexibility¹.

Compliance, Transparency, and Ongoing Obligations

The asset management industry at large is undergoing a transformation propelled by regulators demanding improved transparency, risk controls, and investor disclosure, especially as digital assets gain market share. For Cayman-based entities such as GDLC, this translates to:

Annual audits and financial statement filings with local and, where applicable, U.S. regulators.
Stringent KYC/AML processes designed to ensure integrity and prevent financial crime.
Ongoing compliance checks under both the Private Funds Act and, in the case of tokenized interests or novel structures, the VASP Act.

These measures, while burdensome in some respects, are seen as foundational for winning and retaining the confidence of both regulators and institutional investors.

Official Statements, Leadership Transition, and Strategic Developments

Leadership and Manager Communication

In 2024 and early 2025, Grayscale underwent significant leadership change, as CEO Michael Sonnenshein stepped down and Peter Mintzberg, formerly of Goldman Sachs, assumed the top role. This transition signals the company’s ongoing efforts to align itself with traditional finance sensibilities and to navigate the increasingly competitive digital asset investment sector¹⁵.

Disclosure and Registration Initiatives

In July 2025, Grayscale Investments confidentially submitted a draft S-1 registration statement to the SEC for one or more new or revised products. This step is in line with industry best practice, affording Grayscale the flexibility to launch, adjust, or convert product offerings promptly, subject to SEC clearance and prevailing market conditions. Grayscale has committed, through press releases and disclosures, to ongoing transparency, regulatory compliance, and investor communication as core principles³.

Conclusion

Grayscale Digital Large Cap Fund LLC has, in 2025, solidified its reputation as a vanguard in regulated digital asset investing. The Fund’s 47% surge in net assets year-over-year, coupled with strong realized and unrealized performance, attests to both the resilience of its passive, index-based model and the broad investor acceptance of digital assets as a portfolio component. Yet, this success story plays out amid a complex and evolving regulatory theater: the SEC’s ongoing review of its NYSE Arca listing application underscores both the strides made and the remaining hurdles for digital asset products seeking parity with traditional financial instruments.

The Fund’s transition from the Large Cap Select Index to the CoinDesk 5 Index reflects a market-wide movement toward clarity, liquidity, and institutional comfort—a trend mirrored by regulatory developments pushing for standardization, transparency, and efficiency across the exchange-traded product landscape.

For investors, GDLC offers a window into both the promise and challenges of digital asset indexing: an opportunity to gain diversified, regulated exposure to the most salient crypto assets, and a front-row seat to the ongoing dance between financial innovation and regulatory oversight.

As both the market and regulatory framework mature, funds like GDLC are likely to further shape the bridge between traditional investment paradigms and the decentralized future, with 2025’s performance, compliance enhancements, and evolving methodology serving as crucial benchmarks for the road ahead.