My guess is that this is a benign fungus. Sheaths are very vulnerable because of the way the leaf forms a little cup. Water can sit in there and breed fungus. When the pseudobulb covering is dry and papery like yours is, I peel it back so it will not hold water in the area where the sheath meets the pseudobulb. Some sheaths can also be partly open and allow water to get inside the sheath and breed fungus there. Most of the time it will not extend to the pseudobulb but on rare occasions I have had that happen. I wouldn't do anything about it unless you see the pseudobulb start to change color. If you have a fungicide you can treat it with that.