Grayscale Bitcoin Cash Trust (BCH)

Grayscale Bitcoin Cash Trust (BCH) operates in the digital asset industry, specifically holding Bitcoin Cash (BCH), a digital asset created and transmitted through the peer-to-peer Bitcoin Cash Network, a decentralized network of computers operating on cryptographic protocols. The Bitcoin Cash Network is a fork of the Bitcoin Network created on August 1, 2017, with an adaptive block size limit with a baseline of 32 MB, compared to Bitcoin's 1MB block size limit. The network operates on a proof-of-work model, and new BCH are created and rewarded to miners for verifying transactions. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of BCH, and it will not attempt to speculatively sell or acquire BCH or hedge exposure to price changes. The Trust's investment objective is for the value of the Shares to reflect the value of the BCH held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities. The Trust provides investors with the opportunity to gain exposure to the price of BCH through Shares held in a traditional brokerage account, without the barriers to entry or risks involved with holding or transferring BCH directly. The Trust's BCH are held by the Custodian, Coinbase Custody Trust Company, LLC, in a segregated custody account using offline storage, or cold storage, mechanisms to secure the Trust's private keys. The Trust is not a registered investment company under the Investment Company Act of 1940, and the Sponsor believes the Trust is not required to register under that Act. The Trust will not trade, buy, sell or hold BCH derivatives, including BCH futures contracts, on any futures exchange, and is authorized solely to take immediate delivery of actual BCH.

The Trust faces competition from thousands of digital assets that have been developed since the inception of Bitcoin, which is currently the most developed digital asset because of the length of time it has been in existence, the investment in the infrastructure that supports it, and the network of individuals and entities using Bitcoin in transactions. While BCH has enjoyed some success in its limited history, the aggregate value of outstanding BCH is smaller than that of Bitcoin and Ether and may be eclipsed by the more rapid development of other digital assets. Some industry groups are also creating private, permissioned blockchain versions of digital assets. The Trust's competitive positioning is not explicitly detailed in terms of market share, but the Trust differentiates itself by offering exposure to BCH through a traditional brokerage account, avoiding the barriers to entry or risks involved with holding or transferring BCH directly. The Trust's Shares are quoted on OTC Markets under the ticker symbol BCHG, and the Trust has filed a registration statement on Form S-3 for a proposed public offering and listing on NYSE Arca, though the registration statement has not been declared effective as of the filing date. The Trust relies on the Index Provider, CoinDesk Indices, Inc., to calculate the Index Price, which is designed to mitigate the effects of fraud, manipulation and other anomalous trading activity, and the Index is calculated using a volume-weighted methodology across ten Constituent Trading Platforms.

The Trust generates revenue indirectly through the Sponsor's Fee, which is calculated as 2.5% of the aggregate value of the Trust's assets, less its liabilities, as calculated and published by the Sponsor. The Trust issues Shares in one or more blocks of 100 Shares, called Baskets, to Authorized Participants in exchange for deposits of BCH. The Trust does not operate a redemption program, and Shares are not redeemable by the Trust. The Trust's primary customer segments are accredited investors within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, who deposit BCH in exchange for Shares. The Trust's assets consist solely of BCH, Incidental Rights, IR Virtual Currency, proceeds from the sale of BCH, Incidental Rights and IR Virtual Currency pending use of such cash for payment of Additional Trust Expenses or distribution to shareholders, and any rights of the Trust pursuant to any agreements. The Trust is passive and is not managed like a corporation or an active investment vehicle, and it will not take any actions designed to obtain a profit from, or to reduce losses caused by, changes in the market prices of BCH. The Trust's BCH will be transferred out of the Digital Asset Account only to pay the Sponsor's Fee or any Additional Trust Expenses, sold on an as-needed basis to pay Additional Trust Expenses, transferred or sold in connection with any Incidental Rights or IR Virtual Currency, or sold on behalf of the Trust in the event the Trust terminates and liquidates its assets.

The Trust's sole asset is Bitcoin Cash (BCH), and as of June 30, 2026, each Share represented approximately 0.0081 BCH. The Trust holds BCH to provide investors with exposure to the price of BCH, and the value of the Shares is determined by reference to the Index Price, which is a U.S. dollar-denominated composite reference rate for the price of BCH. The Index Price is calculated by the Index Provider, CoinDesk Indices, Inc., using a five-pronged methodology including volume weighting, FX conversion, outlier detection, inactivity adjustment, and manipulation resistance. The Index is calculated every 5 seconds over a 24-hour period, and the Trust values its BCH for operational purposes by reference to the Index Price, calculated at 4:00 p.m., New York time, on each business day. As of June 30, 2026, the Constituent Trading Platforms included in the Index were Binance, Bitstamp by Robinhood, Bullish, Bybit, Crypto.com, Gate, Gemini, Kraken, LMAX Digital and OKX. The Trust does not expect to take any Incidental Rights or IR Virtual Currency it may hold into account for purposes of determining the Trust's NAV or the NAV per Share. The Trust may come into possession of Incidental Rights and/or IR Virtual Currency by virtue of its ownership of BCH, generally through a fork in the Bitcoin Cash Blockchain, an airdrop offered to holders of BCH or other similar event, and the Sponsor evaluates each fork, airdrop or similar event on a case-by-case basis.

The Trust's service providers include the Sponsor, Grayscale Investments Sponsors, LLC, a consolidated subsidiary of Digital Currency Group, Inc., which is responsible for the day-to-day administration of the Trust, including preparing periodic reports, processing orders to create Baskets, calculating and publishing the NAV and NAV per Share, and selecting and monitoring service providers. The Trustee, CSC Delaware Trust Company, serves as Delaware trustee for the sole purpose of satisfying the requirement of Section 3807(a) of the DSTA, and its duties are limited to accepting legal process and executing certificates required to be filed with the Delaware Secretary of State. The Transfer Agent, Continental Stock Transfer & Trust Company, holds the Shares primarily in book-entry form and assists with the preparation of shareholders' accounts and tax statements. The Custodian, Coinbase Custody Trust Company, LLC, controls and secures the Trust's Digital Asset Account, a segregated custody account to store private keys, using offline storage, or cold storage, mechanisms. Grayscale Securities, LLC, a registered broker-dealer and affiliate of the Sponsor, serves as the distributor and marketer of the Shares. As of the date of the Annual Report, Grayscale Securities is the only acting Authorized Participant, and the Sponsor intends to engage additional Authorized Participants that are unaffiliated with the Trust in the future.

In September 2025, the Trust filed a registration statement on Form S-3 under the Securities Act of 1933, relating to a proposed public offering of the Trust's shares and related listing on NYSE Arca, Inc. As of the date of the filing, the Form S-3 has not been declared effective, and the Trust's shares are offered only through private placements and are publicly traded on OTC Markets. On October 3, 2025, the Sponsor, on behalf of itself and the Trust, and Coinbase, Inc. (the Prime Broker), on behalf of itself and as agent for the Custodian and Coinbase Credit, Inc., entered into the Coinbase Prime Broker Agreement, which will govern the Trust's and the Sponsor's use of the custodial and prime broker services provided by the Custodian and the Prime Broker. The Prime Broker Agreement is not yet effective with respect to the Trust and will not become effective until the date the Shares begin trading on NYSE Arca as shares of an exchange-traded product. The Trust has no employees, officers or directors and is managed by the Sponsor, and all of the Trust's activities are conducted on its behalf by the Sponsor and the Trust's other service providers. The Trust has no fixed termination date, although the Trust Agreement sets forth circumstances under which the Trust may be dissolved.

The Trust's financial performance is primarily driven by the price of BCH and the Trust's expenses, which include the Sponsor's Fee of 2.5% of the aggregate value of the Trust's assets, less its liabilities. The Trust's net asset value (NAV) is calculated using the Index Price, and the Trust's Shares have historically traded at both premiums and discounts to the NAV per Share, which at times have been substantial. The Trust has not met its investment objective to date, and the Shares quoted on OTC Markets have not reflected the value of BCH held by the Trust, less the Trust's expenses and other liabilities. The Trust's financial statements are not included in the provided text, but the Trust's operations are subject to extreme volatility in the trading prices of digital assets, including BCH, which could have a material adverse effect on the value of the Shares. The Trust's expenses are paid in BCH, and the amount of BCH represented by a Share will gradually decrease over time as the Trust's BCH are used to pay the Trust's expenses. The Trust's aggregate market value of Shares held by non-affiliates, based upon the closing price of a Share on December 31, 2025 as reported by the OTC Markets Group Inc., was $202,103,765, and the number of Shares outstanding as of August 31, 2026 was 47,123,300.

The Trust's management has not provided specific quantitative guidance for future revenue, margins, or earnings per share in the filing. The Trust's investment objective is for the value of the Shares to reflect the value of the BCH held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities, but the Trust has not met this objective to date. The Trust may in the future operate a redemption program, subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, which would allow Authorized Participants to take advantage of arbitrage opportunities and may have the effect of reducing any premium or discount at which the Shares trade. The Trust may also halt creations for extended periods of time for a variety of reasons, including in connection with forks, airdrops and other similar events. The Sponsor believes that the Index Provider's selection process for Constituent Trading Platforms and the methodology of the Index Price's algorithm provides a more accurate picture of BCH price movements than a simple average of Digital Asset Trading Platform spot prices.

The Trust's primary growth vector is the potential listing of its shares on NYSE Arca, Inc. as an exchange-traded product. In September 2025, the Trust filed a registration statement on Form S-3 relating to a proposed public offering of the Trust's shares and related listing on NYSE Arca, Inc. As of the date of the filing, the Form S-3 has not been declared effective, and there can be no assurance that the SEC will declare the registration statement effective or that NYSE Arca will approve the listing. The Prime Broker Agreement with Coinbase, Inc. will become effective on the date the Shares begin trading on NYSE Arca as shares of an exchange-traded product. The Trust also intends to engage additional Authorized Participants that are unaffiliated with the Trust in the future, which could enhance the creation process and potentially improve the liquidity of the Shares. The Trust's growth is also dependent on the acceptance of BCH as a digital asset and the development of the Bitcoin Cash Network, including the potential for increased usage and adoption.

The Trust's margin and cost outlook is primarily determined by the Sponsor's Fee, which is calculated as 2.5% of the aggregate value of the Trust's assets, less its liabilities. The Trust's expenses are paid in BCH, and the amount of BCH represented by a Share will gradually decrease over time as the Trust's BCH are used to pay the Trust's expenses. The Sponsor is obligated to pay the Sponsor-paid Expenses, which include fees paid to the Trustee, Transfer Agent, Custodian, and other service providers. The Trust may also incur Additional Trust Expenses, which are paid by the Trust and may be paid in BCH or cash from the sale of BCH. The Trust's cost structure is expected to remain relatively stable, with the Sponsor's Fee being the primary expense, but the Trust's expenses could increase if it becomes subject to new regulations or if it operates a redemption program in the future.

The Trust's operational outlook is centered on its reliance on third-party service providers, including the Custodian, Coinbase Custody Trust Company, LLC, which holds the Trust's BCH in cold storage. The Custodian is required to maintain insurance in types and amounts that are commercially reasonable, and the Custodian has advised the Sponsor that it maintains insurance coverage pursuant to policies held by its ultimate parent, Coinbase Global, Inc., but such insurance is limited and may be insufficient to cover losses with respect to the Trust's BCH. The Trust's operations are dependent on the security and availability of the Bitcoin Cash Network, and the Trust may be affected by forks, airdrops, and other similar events. The Sponsor has the authority to select the network that it believes in good faith is the Bitcoin Cash Network in the event of a fork. The Trust does not have any employees, officers or directors, and all of its activities are conducted on its behalf by the Sponsor and the Trust's other service providers.

The Trust's capital allocation is primarily focused on paying the Sponsor's Fee and Additional Trust Expenses. The Trust does not pay dividends, and shareholders do not have the right to receive dividends. The Trust may make distributions on the Shares in-cash or in-kind, including in connection with Incidental Rights or IR Virtual Currency, but the Trust does not expect to take any Incidental Rights or IR Virtual Currency into account for purposes of determining the Trust's NAV. The Trust's capital expenditures are not explicitly detailed in the filing, but the Trust's primary use of capital is to hold BCH and pay expenses. The Trust's ability to generate returns for shareholders is dependent on the price appreciation of BCH, and the Trust does not engage in any investment strategy beyond tracking the price of BCH.

The Trust faces significant headwinds and constraints, including the extreme volatility of digital asset prices, which could cause the Shares to lose all or substantially all of their value. The Trust's Shares have historically traded at a substantial premium over, or a substantial discount to, the NAV per Share, and there is no arbitrage mechanism to keep the value of the Shares closely linked to the Index Price due to the holding period under Rule 144, the lack of an ongoing redemption program, and the Trust's ability to halt creations. The Trust is also subject to regulatory uncertainty, as changes in U.S. or foreign laws, regulations or regulatory actions may prohibit or restrict the use of BCH or the operation of the Bitcoin Cash Network or the Digital Asset Markets, increase the Trust's costs, impair its ability to operate or require its termination. The Trust relies on third-party service providers, and the replacement of such service providers could pose challenges to the safekeeping of the Trust's BCH and to the operations of the Trust.

The Trust's growth is also constrained by the limited history of digital assets and the dependence of digital asset networks on the internet and other technologies, the role of users, developers and miners, and the potential for malicious activity. The Trust's value depends on the acceptance of BCH, and competition from the emergence or growth of other digital assets could have a negative impact on the price of BCH. The Trust may also be adversely affected by concentrated ownership and large sales or distributions by holders of digital assets, which could have an adverse effect on the market price of such digital assets. A temporary or permanent fork or a clone could adversely affect the value of the Shares. The Trust's operations are also subject to the risk of fraud, market manipulation, business failures, security failures or operational problems on Digital Asset Trading Platforms, which may adversely affect the value of BCH and the value of the Shares.

The most material risks to the Trust include the extreme volatility of digital asset prices, which could cause the Shares to lose all or substantially all of their value. The Trust's Shares have historically traded at a substantial premium over, or a substantial discount to, the NAV per Share, and there is no arbitrage mechanism to keep the value of the Shares closely linked to the Index Price due to the holding period under Rule 144, the lack of an ongoing redemption program, and the Trust's ability to halt creations. The Trust relies on third-party service providers, including the Custodian, and the replacement of such service providers could pose challenges to the safekeeping of the Trust's BCH and to the operations of the Trust. The Trust is subject to regulatory uncertainty, as changes in U.S. or foreign laws, regulations or regulatory actions may prohibit or restrict the use of BCH or the operation of the Bitcoin Cash Network or the Digital Asset Markets, increase the Trust's costs, impair its ability to operate or require its termination. The Trust's value depends on the acceptance of BCH, and competition from the emergence or growth of other digital assets could have a negative impact on the price of BCH. A temporary or permanent fork or a clone could adversely affect the value of the Shares. The Trust may also be adversely affected by concentrated ownership and large sales or distributions by holders of digital assets, which could have an adverse effect on the market price of such digital assets. The Trust's operations are also subject to the risk of fraud, market manipulation, business failures, security failures or operational problems on Digital Asset Trading Platforms, which may adversely affect the value of BCH and the value of the Shares.

The management's message, as conveyed through the Sponsor's actions and the Trust's disclosures, emphasizes the Trust's passive investment approach and its objective to reflect the value of BCH held by the Trust, less expenses and liabilities. The Sponsor highlights the Trust's role in providing investors with exposure to BCH through a traditional brokerage account, avoiding the barriers to entry or risks involved with holding or transferring BCH directly. The Sponsor has taken steps to potentially list the Trust's shares on NYSE Arca, filing a registration statement on Form S-3 in September 2025, and has entered into a Prime Broker Agreement with Coinbase, Inc. to govern custodial and prime broker services, which will become effective upon the Shares beginning trading on NYSE Arca. The Sponsor also emphasizes the importance of the Index Price methodology, which is designed to mitigate the effects of fraud, manipulation and other anomalous trading activity, and the Trust's reliance on the Custodian for the safekeeping of its BCH. The Sponsor's strategic priorities include seeking regulatory approval for a redemption program, which would allow Authorized Participants to take advantage of arbitrage opportunities and potentially reduce the premium or discount at which the Shares trade, and engaging additional Authorized Participants to enhance the creation process. The Sponsor also focuses on the Trust's compliance with applicable regulations and the management of risks related to digital assets, including forks, airdrops, and regulatory changes.