Grayscale Funds Trust

Supplement Details

This supplement provides updated disclosures for the Grayscale Funds Trust, specifically for the Grayscale Bitcoin Covered Call ETF and the Grayscale Bitcoin Premium Income ETF, as listed in Schedule A.

The disclosures replace and supersede previous information regarding the 'Principal Investment Strategy' and 'Dividends and Distributions' sections in the respective prospectuses.

Key updates include:

• Investment strategy involving exchange-traded options contracts referencing a Bitcoin ETP.
• Intention to make bi-weekly distribution payments to shareholders.
• Intention to pay dividends from net investment income and distribute net realized capital gains at least annually.

Schedule A

Grayscale Bitcoin Covered Call ETF Prospectus

Fund Name: Grayscale Bitcoin Covered Call ETF

Ticker: BTCC

Listed on: NYSE Arca, Inc.

Prospectus Date: March 31, 2025

The U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus.

Investment Objectives

The Grayscale Bitcoin Covered Call ETF (the "Fund") seeks to provide current income. Its secondary objective is to participate in the returns of Bitcoin through options on Bitcoin exchange-traded products (ETPs) that aim to track Bitcoin's price performance. Examples of Bitcoin ETPs include Grayscale Bitcoin Trust ETF (GBTC) and Grayscale Bitcoin Mini Trust ETF (BTC).

Fees and Expenses of the Fund

The following table outlines the estimated annual fund operating expenses:

Note: Acquired Fund Fees and Expenses are incurred indirectly through investments in other investment companies.

Expense Example

An example illustrating the cost of investing $10,000 in the Fund for one and three years, assuming a 5% annual return, indicates costs of $67 for 1 year and $211 for 3 years.

Portfolio Turnover

The Fund pays transaction costs for buying and selling securities. As the Fund has not commenced operations, no portfolio turnover information is available.

Principal Investment Strategy

The Fund will not invest directly in digital assets or initial coin offerings. Instead, it gains indirect exposure to Bitcoin's returns through investments in derivatives on Bitcoin ETPs. The strategy is an actively managed, synthetic covered call strategy, utilizing exchange-traded options contracts that reference a Bitcoin ETP. The Fund may purchase and sell call and put option contracts, and write (sell) call options to generate income, which may limit participation in upward price movements of the underlying Bitcoin ETPs. Typically, at least 80% of net assets will be invested in options contracts referencing a Bitcoin ETP. The Fund may utilize a wholly-owned subsidiary organized in the Cayman Islands for exposure to options on Bitcoin ETPs.

The Fund does not invest in or seek direct exposure to the current spot or cash price of Bitcoin.

Additional Information on Bitcoin

Bitcoin is a digital asset operating on a peer-to-peer network, recorded on a public transaction ledger (blockchain). Its value is determined by supply and demand, not backed by any government. The network is maintained by miners, developers, and users. Bitcoin's price is subject to extreme fluctuations and volatility.

Principal Investment Risks

Investing in the Fund involves significant risks, including:

• Market and Volatility Risk: The Fund's value is subject to market fluctuations, and digital assets like Bitcoin are historically highly volatile, potentially leading to significant losses, including the total loss of investment.
• Bitcoin Investment Risk: Bitcoin and its trading venues are largely unregulated, increasing risks of fraud, manipulation, and security failures. Changes to Bitcoin software (forks) can impact its value.
• Digital Assets Risk: Digital assets are an emerging asset class with inherent risks including theft, loss, and destruction. Trading platforms are often unregulated and susceptible to fraud and failure.
• Blockchain Technology Risk: Blockchain technology is new and its widespread adoption is uncertain. Risks include theft, loss, competing platforms, cybersecurity incidents, lack of liquid markets, lack of regulation, network amendments, and third-party product vulnerabilities.
• Digital Asset Tax Risk: The U.S. federal income tax treatment of digital assets is uncertain, potentially impacting the Fund's ability to qualify as a regulated investment company (RIC).
• Bitcoin ETPs Investment Risk: The Fund's exposure to Bitcoin ETPs via derivatives means its share price may not directly correspond to Bitcoin's price and is subject to volatility. These ETP shares are not registered under the 1940 Act.
• Bitcoin ETP Options Risk: The market for options on Bitcoin ETPs may be less developed, less liquid, and more volatile than established options markets.
• Options Risk: The use of options involves complex strategies and risks, including price volatility, imperfect correlation, and potential illiquidity.
• FLEX Options Risk: Similar to other options, FLEX Options carry risks related to settlement by the OCC, potential illiquidity, and price volatility.
• Assignment Risk: The OCC may assign exercise notices, potentially forcing the Fund to settle option positions at inopportune times.
• Covered Call Option Writing Risk: Writing call options may limit participation in upside price movements and may not offset losses from underlying asset declines.
• Subsidiary Investment Risk: The Fund's investment through its subsidiary means it is indirectly exposed to the subsidiary's risks and may not receive the same investor protections.
• Asset Class Risk: The Fund's portfolio assets may underperform compared to broader financial markets or other asset classes.
• Exchange-Traded Fund (ETF) Risks: Risks include concentration of Authorized Participants (APs), market makers, and liquidity providers; costs of buying/selling shares; shares trading at prices different from NAV; and trading halts.
• Exchange-Traded Products (ETPs) Risk: ETP shares may trade at a premium or discount to their intrinsic value due to supply/demand or market disruptions.
• Cash Transactions Risk: Using cash for creations/redemptions may require selling assets at inopportune times, impacting performance and potentially increasing bid-ask spreads or premiums/discounts.
• Turnover Risk: Frequent trading can increase portfolio turnover, leading to higher transaction costs and potentially lower performance.
• U.S. Government Securities Risk: Subject to interest rate risk, with generally lower yields than other debt securities.
• Valuation Risk: Difficulty in obtaining reliable market quotations for certain securities may lead to fair valuation, which can result in greater price fluctuations.
• Issuer Risk: The performance of the Fund depends on the performance of individual issuers, which can be affected by various factors including management, competition, and economic conditions.
• Liquidity Risk: The risk that investments cannot be sold at an advantageous time or price, particularly in stressed market conditions.
• Market and Volatility Risk: Holdings are subject to market fluctuations; digital assets are highly volatile.
• Money Market Fund Risk: Value can be affected by interest rates and credit ratings; investment is not FDIC insured.
• New Fund Risk: The Fund has no operating history, making investment decisions based on past performance impossible.
• Non-Diversification Risk: Investing in fewer issuers increases exposure to risks associated with those specific issuers.
• Leverage Risk: Using leverage can magnify losses, potentially exceeding the initial investment.

Portfolio Management

The Fund is managed by Grayscale Advisors, LLC (the "Adviser"), with Vident Asset Management serving as the Sub-Adviser. The portfolio management team includes Yin Bhuyan, Austin Wen (CFA), and Rafael Zayas (CFA).

Purchase and Sale of Shares

Shares trade on the secondary market through brokers at market prices, which may differ from Net Asset Value (NAV). Shares are issued and redeemed in "Creation Units" by Authorized Participants (APs). Investors may incur bid-ask spread costs when trading.

Tax Information

Fund distributions are generally taxable as ordinary income, qualified dividend income, or capital gains. The Fund intends to qualify as a Regulated Investment Company (RIC). Investors should consult their tax advisors regarding specific tax implications.

Financial Intermediary Compensation

Affiliates of the Adviser may pay intermediaries for activities related to the Fund, which could influence recommendations.

Additional Information About the Fund

Further details on the Fund's policies, operations, and risks are available in its Statement of Additional Information (SAI) and annual/semi-annual reports.

Distribution

Foreside Fund Services, LLC is the Distributor. The Fund has adopted a Distribution and Service Plan (Rule 12b-1), though no fees are currently paid.

Premium/Discount Information

Information on share trading premiums and discounts relative to NAV is available on the Fund's website.

Financial Highlights

The Fund has not commenced operations and therefore has no financial information to report.

Contact and Availability

Free copies of documents and further information can be obtained from the SEC's EDGAR database (http://www.sec.gov), the Fund's website (http://etfs.grayscale.com/btcc), or by contacting the Fund at Grayscale Bitcoin Covered Call ETF, c/o U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, WI 53202, or by calling 866-775-0131.