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

Chunk 3 of 74
Word Count: 1358
Character Count: 8454

Document Content:

The Trust will not use derivatives such as swaps, futures, or options in its investment strategy. Using derivatives could subject the Trust to derivatives counterparty, credit, and other risks, though the Trust also will not attempt to use derivatives to hedge the risk of declines in the price of BNB held by the Trust. The Sponsor believes that the design of the Trust will enable certain investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use BNB by investing in the Shares rather than purchasing, holding and trading BNB directly or through derivatives. Subject to the Staking Regulatory Approval, the Trust may employ its BNB in Staking Activities and accordingly may earn staking rewards and income from Staking Activities. Except as set forth in the Trust Agreement and described herein, Shareholders have no voting rights with respect to the Trust. BNB and the BNB Chain

BNB is a digital asset that is created and transmitted through the operations of the peer-to-peer BNB Chain, a network of computers that operates on cryptographic protocols based on open-source code, the infrastructure of which is understood to be collectively maintained by a global user base. The BNB Chain allows people to exchange tokens of value, called BNB, which are recorded on a public transaction ledger known as a blockchain. BNB can be used to pay for goods and services, including computational power on the BNB Chain, or it can be converted to fiat currencies, such as the U.S. dollar, at rates determined on digital asset trading platforms or in individual end-user- to-end-user transactions under a barter system. Furthermore, the BNB Chain was designed to allow users to write and implement smart contracts—that is, general-purpose code that executes on every computer in the network and can instruct the transmission of information and value based on a sophisticated set of logical conditions. Using smart contracts, users can create markets, store registries of debts or promises, represent the ownership of property, move funds in accordance with conditional instructions and create digital assets other than BNB on the BNB Chain. Smart contract operations are executed on the BNB Chain in exchange for payment of BNB. Like the Ethereum network, the BNB Chain is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system.

BNB Chain

BNB Chain is a blockchain and smart contract network for permissionless applications. The BNB Chain is an open-source protocol that enables users to deploy smart contracts to support their blockchain projects. The BNB Chain was created by Binance, a cryptocurrency exchange, in 2017. The BNB Chain is comprised of three blockchains, BNB Smart Chain, opBNB and BNB Greenfield, which allow the network to create and trade assets such as BNB, coordinate transaction validators and facilitate the creation of smart contracts. Each chain serves a different purpose. a BNB Smart Chain is a Layer 1 blockchain used to enable the development of user-generated permissionless applications (“Dapps”), including in the decentralized finance (“DeFi”) space. opBNB is used as a Layer 2 scaling solution for BNB Smart Chain. BNB Greenfield is used as a blockchain storage solution. The BNB Chain is one of the competitors of Ethereum. BNB Chain is powered by the proof-of-staked-authority consensus protocol, which combines delegated proof of stake (“DPoS”) and proof-of-authority (“PoA”) algorithms.

The BNB token

BNB is the native token of the BNB Chain and serves as the base currency for transactions, smart contract interactions and deployment, as a governance token on BNB Chain that allows token holders to participate in the governance of the network, and can currently be used to obtain discounts on trading fees on Binance. BNB can be staked to help secure the network and earn staking rewards. BNB has a capped supply of 200 million and is used as fee payment, for staking in BNB Chain's consensus process and for on-chain voting. BNB holders may become transaction validators if they stake a minimum number of BNB (although the number of validators at any one time is limited) or can delegate their coins to an already existing validator.

The Trust's Investment Objective and Strategies

The Trust's investment objective is to reflect the performance of the price of BNB less the expenses of the Trust's operations. In seeking to achieve its investment objective, the Trust will hold BNB and will value its Shares daily based on the reported [ ], which is calculated based on prices contributed by exchanges that the Sponsor's affiliate, MarketVector, believes represent the top five BNB trading platforms based on the industry leading [ ] review report as described below, and process all creations and redemptions in transactions with Authorized Participants as described below. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of BNB. As a result, the Trust will not attempt to speculatively sell BNB at times when its price is high or speculatively acquire BNB at low prices in the expectation of future price increases, nor will the Trust attempt to avoid losses or hedge exposure arising from the risk of changes in the price of BNB. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective. Subject to the Staking Regulatory Approval, the Trust may employ its BNB in Staking Activities and accordingly may earn staking rewards and income from Staking Activities.

When the Trust sells or redeems its Shares, it will do so in blocks of [  ] Shares ("Baskets") that are based on the amount of BNB represented by the Basket being created, the amount of BNB being equal to the combined net asset value of the number of Shares included in the Basket (net of the accrued but unpaid remuneration due the Sponsor ("Sponsor Fee") and any accrued but unpaid expenses or liabilities not assumed by the Sponsor). The Trust will conduct subscriptions and redemptions in cash or in-kind transactions with financial firms that are authorized to purchase or redeem Shares with the Trust (known as "Authorized Participants" or "APs"). Authorized Participants must be registered broker-dealers.

For a subscription in cash, the Authorized Participant's subscription for Shares shall be in the amount of cash needed to purchase the amount of BNB represented by the Basket being created, as calculated by the Administrator based on the Index or the other valuation policies described herein. The AP will deliver the cash to the Trust's account at the Cash Custodian, which the Sponsor will then use to purchase BNB from a third party who may be affiliated with the AP (such third party, a "Liquidity Provider"). For a redemption in cash, the Sponsor shall arrange for the BNB represented by the Basket to be sold to a Liquidity Provider and the cash proceeds distributed from the Trust's account at the Cash Custodian to the Authorized Participant in exchange for their Shares. For an "in-kind" subscription, Authorized Participants will deliver, or facilitate the delivery of, BNB to the Trust's account with the BNB Custodian in exchange for Shares when they purchase Shares. For an "in-kind" redemption transaction, when Authorized Participants redeem Shares with the Trust, the Trust, through the BNB Custodian, will deliver BNB to such Authorized Participants, or a designee thereof, in exchange for their Shares.

In addition to selling BNB to distribute cash to Authorized Participants redeeming Shares via cash redemptions, the Sponsor may sell BNB to pay certain expenses not assumed by the Sponsor (described below), which may be facilitated by one or more Liquidity Providers and/or the BNB Custodian or an affiliate thereof. All BNB will be held by the BNB Custodian, a third-party custodian that carries insurance and [  ]. The Transfer Agent (as defined below) will facilitate the processing of purchase and sale orders in Baskets from the Trust.

The Trust will engage in BNB transactions for converting cash into BNB (in association with purchase orders) and BNB into cash (in association with redemption orders). The Trust will conduct its BNB purchase and sale transactions by trading directly with third parties, some of whom may be affiliated with APs (each, a "Liquidity