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 17 of 74
Word Count: 1479
Character Count: 9848

Document Content:

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;

•forks in the BNB Chain, particularly where changes to the BNB Chain source code are either not well-received by key constituencies within the BNB Chain community or are not successfully executed or implemented and fail to achieve the functionality such changes were intended to bring about;

•governmental or regulatory actions by, or investigations or litigation in, countries around the world targeting well-known decentralized applications or smart contracts that are built on the BNB Chain, Binance or its principals or associated entities and persons, or other developments or problems, and associated publicity, involving or affecting such decentralized applications or smart contracts or Binance or its principals or associated entities and persons;

•Increased competition from other forms of digital assets or payment services, including digital currencies constituting legal tender that may be issued in the future by central banks, or digital assets meant to serve as a medium of exchange by major private companies or other institutions;

•increased competition from other blockchain networks combining smart contracts, programmable scripting languages, and an associated runtime environment, with blockchain-based recordkeeping, particularly where such other blockchain networks are able to offer users access to a larger consumer user base, greater efficiency, reliability, or processing speed, or more economical transaction processing fees than the BNB Chain;

•investors' expectations with respect to interest rates, the rates of inflation of fiat currencies or BNB, and digital asset exchange rates;

•consumer preferences and perceptions of BNB specifically and digital assets generally, the BNB Chain relative to competing blockchain protocols, and BNB relative to competing digital assets;

•negative events, publicity, and social media coverage relating to the digital assets and blockchain technology industry;

•fiat currency withdrawal and deposit policies on digital asset trading platforms;

•the liquidity of digital asset markets and any increase or decrease in trading volume or market making on digital asset markets;

•business failures, bankruptcies, hacking, fraud, crime, government investigations, or other negative developments affecting digital asset businesses, including digital asset trading platforms, or banks or other financial institutions and service providers which provide services to the digital assets industry;

•the use of leverage in digital asset markets, including the unwinding of positions, "margin calls", collateral liquidations and similar events;

•investment and trading activities of large or active consumer and institutional users, speculators, miners, and investors in BNB;

•a "short squeeze" resulting from speculation on the price of BNB, if aggregate short exposure exceeds the number of shares available for purchase;

•an active derivatives market for BNB or for digital assets generally;

•monetary policies of governments, legislation or regulation, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if any, that restrict the use of BNB as a form of payment or the purchase of BNB on the digital asset markets;

•global or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak;

•fees associated with processing a BNB transaction and the speed at which BNB transactions are settled;

•the maintenance, troubleshooting, and development of the BNB Chain including by miners and developers worldwide;

•the ability for the BNB Chain to attract and retain miners to secure and confirm transactions accurately and efficiently;

•ongoing technological viability and security of the BNB Chain and BNB transactions, including vulnerabilities against hacks and scalability;

•financial strength of market participants;

•the availability and cost of funding and capital;

•the liquidity and credit risk of digital asset trading platforms;

•interruptions in service from or closures or failures of major digital asset trading platforms or their banking partners, or outages or system failures affecting the BNB Chain;

•decreased confidence in digital assets and digital assets trading platforms;

•poor risk management or fraud by entities in the digital assets ecosystem;

•increased competition from other forms of digital assets or payment services; and

•the Trust's own acquisitions or dispositions of BNB, since there is no limit on the number of BNB that the Trust may acquire.

Although returns from investing in BNB have at times diverged from those associated with other asset classes to a greater or lesser extent, there can be no assurance that there will be any such divergence in the future, either generally or with respect to any particular asset class, or that price movements will not be correlated. In addition, there is no assurance that BNB will maintain its value in the long, intermediate, short, or any other term. In the event that the price of BNB declines, the Sponsor expects the value of the Shares to decline proportionately.

The value of the Shares of the Trust are represented by the MarketVectorTM [ ] that may also be subject to momentum pricing due to speculation regarding future appreciation in value of BNB, leading to greater volatility that could adversely affect the value of the Shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. The Sponsor believes that momentum pricing of BNB has resulted, and may continue to result, in speculation regarding future appreciation in the value of BNB, inflating and making the MarketVectorTM [ ] more volatile. As a result, BNB may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in the MarketVectorTM [ ] and could adversely affect the value of the Trust.

The Trust is not actively managed and does not and will not have any strategy relating to the development of the BNB Chain, nor will the Trust seek to avoid or mitigate losses from declines in the BNB price. Furthermore, the impact of the expansion of the Trust's BNB holdings on the digital asset industry and the BNB Chain is uncertain. A decline in the popularity or acceptance of the BNB Chain, or the value of BNB, would harm the value of the Trust.

Digital Asset Networks Face Significant Scaling Challenges And Efforts To Increase The Volume and Speed Of Transactions May Not Be Successful.

Many digital asset networks, including the BNB Chain, face significant scaling challenges due to the fact that public blockchains generally face a tradeoff between security and scalability. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization generally means a given digital asset network is less susceptible to manipulation or capture. Achieving decentralization may mean that every single node on a given digital asset network is responsible for securing the system by processing every transaction and every single full node is responsible for maintaining a copy of the entire state of the network. However, this may involve tradeoffs from an efficiency perspective, and impose constraints on throughput. A digital asset network may be limited in the number of transactions it can process by the fact that all validators participate in validating in each block and the capabilities of each single fully participating node. Many developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower levels of security or decentralization, such as off-chain payment channels. Off-chain payment channels would allow parties to transact without requiring the full processing power of a blockchain.

As of December 31, 2024, the BNB Chain handled approximately [4,600] transactions per second. In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital assets are being upgraded with various features to increase the speed and throughput of digital asset transactions.

As corresponding increases in throughput lag behind growth in the use of digital asset networks, average fees and settlement times may increase considerably. Since inception, BNB transaction fees have generally stood at a fixed rate of [ ] BNB per transaction. Increased fees and decreased settlement speeds could preclude certain uses for BNB (e.g., micropayments) and could reduce demand for, and the price of, BNB, which could adversely impact the value of the Shares.