SEC Filing Document

Company: Grayscale BNB ETF
Ticker: GBNB
CIK: 2106762
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2026-05-15
Accession Number: 0001193125-26-227224
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2106762/000119312526227224/bnb_s-1_amendment_2.htm

Chunk 36 of 90
Word Count: 1398
Character Count: 8906

Document Content:

A U.S. tax-exempt shareholder may recognize “unrelated business taxable income” as a consequence of an investment in Shares. Under the guidance provided in the Ruling & FAQs, hard forks, airdrops and similar occurrences with respect to digital assets will under certain circumstances be treated as taxable events giving rise to ordinary income. Moreover, as separately provided by the IRS in the 2023 Staking Guidance, staking rewards will, under certain circumstances, be treated as giving rise to taxable income. In the absence of guidance to the contrary, it is possible that any such income recognized by a U.S. tax-exempt shareholder would constitute UBTI. A tax-exempt shareholder should consult its tax adviser regarding whether such shareholder may recognize UBTI as a consequence of an investment in Shares. See “Business—Material U.S. Federal Income Tax Consequences.” The tax treatment of BNB and transactions involving BNB for state and local tax purposes is not settled.

Because BNB is a new technological innovation, the tax treatment of BNB for state and local tax purposes, including, without limitation state and local income and sales and use taxes, is not settled. It is uncertain what guidance, if any, on the treatment of BNB for state and local tax purposes may be issued in the future. A state or local government authority’s treatment of BNB may have negative consequences, including the imposition of a greater tax burden on investors in BNB or the imposition of a greater cost on the acquisition and disposition of BNB generally. Any such treatment may have a negative effect on prices of BNB and may adversely affect the value of the Shares.

Shareholders may be subject to withholding tax on income derived from forks, airdrops and similar occurrences and, if the Staking Condition is satisfied, Staking Consideration received as staking rewards.

The Ruling & FAQs do not address whether income recognized by a non-U.S. person as a result of a fork, airdrop or similar occurrence or staking could be subject to the 30% withholding tax imposed on U.S.-source “fixed or determinable annual or periodical” income. Non-U.S. Holders (as defined under “Material U.S. Federal Income Tax Consequences—Tax Consequences to Non-U.S. Holders”) should be aware that, in the absence of guidance, a withholding agent (including a broker through which a Non-U.S. Holder holds Shares) may withhold 30% of any such income recognized by a non-U.S. Holder in respect of its Shares, including by deducting such withheld amounts from proceeds that such non-U.S. Holder would otherwise be entitled to receive in connection with a distribution of Incidental Rights, IR Virtual Currency or, if the Staking Condition is satisfied, Staking Consideration received as staking rewards. See “Material U.S. Federal Income Tax Consequences.”

In addition, the Trust may enter into Staking Arrangements with Staking Providers organized in, or that have operations in, a non-U.S. jurisdiction. Non-U.S. jurisdictions may seek to impose withholding tax on Staking Consideration received by the Trust as staking rewards, which may negatively affect a shareholder’s investment in the Trust.

Risk Factors Related to Staking

Validators may suffer losses due to Staking, or Staking may prove unattractive to validators, which could adversely affect the BNB Smart Chain.

Validation on the BNB Smart Chain requires BNB to be locked in a smart contract on the underlying blockchain network not under the control of the person who owns such BNB. If the BNB Smart Chain source code or protocol were to fail to behave as expected, suffer cybersecurity attacks or hacks, experience security issues, or encounter other problems, staked BNB may be irretrievably lost. The BNB Smart Chain imposes multiple types of sanctions for validator misbehavior or inactivity: double sign slash, malicious fast finality vote slash, downtime slash, and low self-delegation slash. Double signing occurs when a validator submits two conflicting signed messages or blocks for the same slot, which can create inconsistencies in the network. The double sign slash penalty is 200 BNB and a “jail time” of 30 days during which the validator cannot participate in validation efforts. Malicious fast finality vote slashing occurs when a validator signs two conflicting fast finality votes, effectively attempting to alter or disrupt the BNB Smart Chain’s history or consensus. The malicious fast finality vote slash penalty is 200 BNB and a jail time of 30 days. The downtime slash occurs when a validator misses over 50 blocks in 24 hours in which it is an active validator. Rewards will not be distributed to that validator for those blocks. If a validator misses more than 150 blocks within 24 hours, the downtime slash penalty is 10 BNB and a jail time of two days. The low self-delegation slash occurs when validators self-stake less than the minimum requirement of 2,000 BNB. If a validator’s self-staked amount is less than the minimum requirement, the low self-delegation slash penalty is a jail time of two days.

Slashing, jailing, cybersecurity attacks, security issues, hacks 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 Smart Chain’s adoption or the price of BNB. Any disruption of validation on the BNB Smart Chain

could interfere with network operations and cause the BNB Smart Chain to be less attractive to users and application developers than competing blockchain networks, which could cause the price of BNB to decrease.

Subject to the Staking Condition being satisfied and subject to compliance with certain related requirements, the Sponsor has sole discretion over whether the Trust will engage in Staking, and there can be no assurance that the Sponsor will cause the Trust to engage in Staking. If the Sponsor causes the Trust to engage in Staking, the Sponsor will cause the Trust to engage in Staking with respect to all of the Trust’s BNB at all times, except (i) as necessary to pay the Sponsor’s Fee and the Sponsor’s Staking Fee, (ii) as necessary to pay any additional Trust expenses, (iii) as necessary to satisfy existing and reasonably foreseen potential redemption requests as determined by the Sponsor, (iv) as necessary to reduce the BNB obtained by the Trust as Staking Consideration to cash for distribution at regular intervals, (v) as necessary to reduce the BNB obtained by the Trust as Staking Consideration to cash in connection with the Trust’s liquidation, (vi) as necessary to take protective actions in respect of vulnerabilities in the source code or cryptography underlying the BNB Smart Chain and/or its proof-of-staked-authority protocol, its staking smart contracts or its validator client software, (vii) if the Custodian discontinues its arrangements with the Trust and such discontinuance affects the Trust’s BNB, for so long as is reasonably necessary to re-establish those arrangements or to establish similar arrangements with other parties, (viii) if the Custodian discontinues its arrangements with the Staking Provider and such discontinuance affects the Trust’s BNB, for so long as is reasonably necessary to re-establish those arrangements or to establish similar arrangements with other parties, (ix) in the event of a change in applicable law or regulation, (x) as necessary to maintain a Liquidity Sleeve (as defined herein), (xi) as necessary pursuant to a “contingent liquidity arrangement” within the meaning of Section 6.02(12) of IRS Revenue Procedure 2025-31 or (xii) in accordance with any other exception that is expressly contemplated by an opinion, ruling or tax guidance that satisfies the Staking Condition. All BNB received by the Trust in connection with the creation of new Shares, or as Staking Consideration, would also be staked upon receipt by the Trust, unless one or more of the exceptions described in clauses (i)-(xii) above applies. Moreover, any staked BNB which must be un-staked in order to fulfill a distribution in connection with a redemption (to the extent such distribution cannot be fulfilled utilizing the portion of the Trust’s BNB that has not been staked, or through another mechanism to manage liquidity in connection with Redemption Orders contemplated by an opinion of a Tax Advisor, a Tax Ruling or Tax Guidance that satisfies the Staking Condition) will be un-staked only after the redemption request is approved by the Trust, the Sponsor executes an un-stake or withdrawal transaction through the Custodian, and such transaction is processed by the BNB Smart Chain. During the portion of any Uplisted Period during which the Staking Condition has been satisfied with respect to a particular form of Staking, the Trust Agreement imposes further requirements relating to IRS Revenue Procedure 2025-31.