SEC Filing Document

Company: VanEck BNB ETF
Ticker: 
CIK: 2066824
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-05-05
Accession Number: 0002066824-25-000002
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2066824/000206682425000002/vaneckbnbetfs-1.htm

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smart contract or may suffer a partial or total loss of any digital assets they have used to transact with the smart contract. Furthermore, the underlying smart contracts may be insecure, contain bugs or other vulnerabilities, or otherwise may not work as intended. Any of the foregoing could cause users of the DeFi application to be negatively affected, or could cause the DeFi application to be the subject of negative publicity. Because DeFi applications may be built on the BNB Chain and represent a significant source of demand for BNB, public confidence in the BNB Chain itself could be negatively affected, such sources of demand could diminish and the value of BNB could decrease. Similar risks apply to any smart contract or decentralized application, not just DeFi applications. Validators May Suffer Losses Due To Staking, Or Staking May Prove Unattractive To Validators, Which Could Make The BNB Chain Less Attractive.

Validation on the BNB Chain requires BNB to be transferred into smart contracts on the underlying blockchain networks not under the Trust's or anyone else's control. If the BNB Chain source code or protocol fail to behave as expected, suffer cybersecurity attacks or hacks, experience security issues, or encounter other problems, such assets may be irretrievably lost. In addition, the BNB Chains dictate requirements for participation in validation activity, and may impose penalties, if the relevant activities are not performed correctly. The BNB Chain sanction (i.e., "slashing") is imposed if a validator commits malicious acts related to the validation of blocks with invalid transactions. [On the BNB Chain, slashing generally operates by social consensus, rather than being automatically hardwired into the protocol’s code. The BNB Chain community generally aspires to slash 100% of staked assets in cases where a BNB Chain node is maliciously trying to violate safety rules and 0% during routine operation. There is currently no automatic slashing in the BNB Chain. Rather, for regular consensus, after a safety violation, the BNB Chain will halt. The validators will analyze the data prior to the halt and figure out who was responsible and propose that the stake of the malicious actors responsible for the safety violation should be slashed after restart, typically 100%. Separately, as part of the "activating" and "de-activating" or “cooling down” processes of staking, staked BNB will be inaccessible for a variable period of time determined by a range of factors, including [ ], resulting in potential inaccessibility during those periods. "Activation" is the funding of a validator to be included in the active set, thereby allowing the validator to participate in the BNB Chain's proof-of-stake consensus protocol. "De-activating" is the request to exit from the active set and no longer participate in the BNB Chain's proof-of-stake consensus protocol. As part of these "activating" and "de-activating" processes of staking on the BNB Chain, any staked BNB will be inaccessible for a period of time. The duration of activating and exiting periods are dependent on a range of factors, including [ ]. However, depending on demand, un-staking can take between one to several epochs to complete. An Epoch is approximately two days long on the BNB Chain.]

On the BNB Chain, the practice of paying prioritization fees is common, as it is the only source of income for validators (since new BNB is not minted as a block reward for validators, unlike Bitcoin and Ethereum), and such fees can become significant as the amount and complexity of the transaction grows, depending on the degree of

network congestion and the price of BNB. Any cybersecurity attacks, security issues, hacks, penalties, slashing events, or other problems could damage validators' willingness to participate in validation, discourage existing and future validators from serving as such, and adversely impact the BNB Chain's adoption or the price of BNB. Any disruption of validation on the BNB Chain could interfere with network operations and cause the BNB Chain to be less attractive to users and application developers than competing blockchain networks, which could cause the price of BNB to decrease. The limited liquidity during the "activation" or "de-activation" processes could dissuade potential validators from participating, which could interfere with network operations or security and cause the BNB Chain to be less attractive to users and application developers than competing blockchain networks, which could cause the price of BNB to decrease.

Proof-Of-Stake Blockchains Are A Relatively Recent Innovation, And Have Not Been Subject To As Widespread Use Or Adoption Over As Long Of A Period Of Time As Traditional Proof-Of-Work Blockchains.

Certain digital assets, such as bitcoin, use a "proof-of-work" consensus algorithm. The genesis block on the Bitcoin blockchain was mined in 2009, and Bitcoin's blockchain has been in operation since then. Many newer blockchains enabling smart contract functionality, including the current Ethereum network following the completion of the Merge in 2022, use a newer consensus algorithm known as "proof-of-stake." While their proponents believe that they may have certain advantages, the "proof-of-stake" consensus mechanisms and governance systems underlying many newer blockchain protocols, including the BNB Chain, and their associated digital assets – including the BNB held by the Trust – have not been tested at scale over as long of a period of time or subject to as widespread use or adoption as, for example, Bitcoin's proof-of- work consensus mechanism has. This could lead to these blockchains, and their associated digital assets, having undetected vulnerabilities, structural design flaws, suboptimal incentive structures for network participants (e.g., validators), technical disruptions, or a wide variety of other problems, any of which could cause these blockchains not to function as intended, lead to outright failure to function entirely causing a total outage or disruption of network activity, or to suffer other operational problems or reputational damage, leading to a loss of users or adoption or a loss in value of the associated digital assets, including the Trust's assets. Over the long term, there can be no assurance that the proof-of-stake blockchain on which the Trust's assets rely will achieve widespread scale or adoption or perform successfully; any failure to do so could negatively impact the value of the Trust's assets.

Operational Cost May Exceed The Award For Validating Transaction, And Increased Transaction Fees May Adversely Affect The Usage Of The BNB Chain.

If transaction confirmation fees become too high, the marketplace may be reluctant to use the BNB Chain. This may result in decreased usage and limit expansion of the BNB Chain in the retail, commercial and payments space, adversely impacting investment in the Trust. Conversely, if the reward for validators or the value of the transaction fees is insufficient to motivate validators, they may cease to validate transactions.

Ultimately, if the awards of new BNB costs of validating transactions grow disproportionately, validators may operate at a loss, transition to other networks, or cease operations altogether. Each of these outcomes could, in turn, slow transaction validation and usage, which could have a negative impact on the BNB Chain and could adversely affect the value of the BNB held by the Trust.

An acute cessation of validator operations would reduce the collective processing power on the BNB Chain, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the blockchain and make the blockchain more vulnerable to a malicious actor obtaining control in excess of the relevant threshold of the processing power on the blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or may adversely impact the value of Shares of the Trust or the ability of the Sponsor to operate.

Risks Associated with the Digital Asset Markets

The Value Of The Shares Relates Directly To The Value Of BNB, The Value Of Which May Be Highly Volatile And Subject To Fluctuations Due To A Number Of Factors.

The value of the Shares relates directly to the value of the BNB held by the Trust and fluctuations in the price of BNB could adversely affect the value of the Shares. The market price of BNB may be highly volatile, and subject to a number of factors, including:

•an increase in the global BNB supply or a decrease in global BNB demand;

•market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry;

•activities of Binance or its principals or associated entities and persons;

•trading activity on digital asset trading platforms, which, in many cases, are largely unregulated or may be subject to manipulation;

•the adoption of BNB as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the BNB Chain, and their ability to meet user demands;

•manipulative trading activity on digital asset exchanges, which, in many cases, are largely unregulated;

•the needs of decentralized applications, smart contracts, their users, and users of the BNB Chain generally for BNB to pay gas fees to execute transactions;