SEC Filing Document

Company: VanEck BNB ETF
Ticker: 
CIK: 2066824
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2025-10-30
Accession Number: 0001628280-25-047581
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2066824/000162828025047581/vaneckbnbs-1a1.htm

Chunk 3 of 98
Word Count: 1493
Character Count: 9730

Document Content:

during normal and stressed conditions, including use of borrowing for investment purposes and derivatives and whether the investment strategy is appropriate for effective and efficient arbitrage, (ii) holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, (iii) percentage and description of the Trust's assets that are segregated, pledged, hypothecated, encumbered, or otherwise restricted or prevented from being liquidated, sold, transferred or assigned, (iv) the lock-up period, including the bonding and unbonding periods and the entry and exit wait times involved in the staking process, and (v) the historical percentages of cumulative drawdowns in redemptions for U.S. listed crypto-based ETFs and other similar instruments listed globally. With respect to factor (i) above, the Staking Policy provides that the Sponsor has the authority to adjust the size of the Baskets if it determines that such changes would improve the effectiveness and efficiency of the arbitrage mechanism.

Following the liquidity risk assessment, the Sponsor will determine whether changes to the administration of the Trust's staking program are necessary. Any changes made or recommended will be evaluated during the next liquidity risk assessment.

The Trust continues to update its liquidity risk policies and procedures with respect to LSTs. The Staking Policy is intended to be and is in line with the generic listing standards of the Exchange.

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, resulting in potential inaccessibility during those periods. As a result, the Trust may not be able to promptly access or liquidate staked BNB to meet redemption requests in amounts that are greater than the portion of the Trust's BNB that remains un-staked or respond to adverse market conditions. This delay could adversely affect the Trust's liquidity and its ability to fulfil investor redemptions in a timely manner, particularly during periods of heightened market volatility or significant redemption activity.

The Sponsor is responsible for assessing, managing, and periodically reviewing the Trust's liquidity risk annually. In conducting the liquidity risk assessment, the Sponsor considers all relevant risks, including the Trust's investment strategy and liquidity during normal and stressed conditions, the Trust's holdings of cash and cash equivalents and the "activating" and "de-activating" period involved in the staking process, and determines whether

any adjustments to the management of the Trust's liquidity risk are necessary. Potential adjustments may include reducing the proportion of BNB allocated to staking or increasing the amount of BNB kept readily available to meet redemption requests.

As a result of any staking activity in which the Trust may engage, the Trust expects to receive certain staking rewards of BNB, which may be treated for U.S. federal income tax purposes as income to the Trust (see "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders," for a further description of the tax implications of the activities of the Trust to an investor). The Staking Services Provider exercises no discretion as to the amount of the Trust's BNB to be staked or timing of the staking activities (other than as is incidental in establishing or deactivating validator nodes). The BNB Custodian and Additional BNB Custodian will maintain exclusive possession and control of the private keys associated with any staked BNB(or, if the Trust holds LSTs, the private keys to the Trust's LSTs) at all times. Staking activity on the BNB Chain involves the delegation of BNB to validators and carries certain risks, such as bugs, software defects, unauthorized cybersecurity breaches ("hacks"), theft, or loss. Staked BNB may be subject to community-determined penalties for validator misbehavior, or slashing. If the Staking Service Provider causes the Trust's staked BNB to be subject to such slashing losses, the Trust could suffer losses of the staked BNB. Additionally, the staking process includes protocol-defined warm-up, activation and withdrawal periods, during which staked BNB is temporarily locked and inaccessible. These phases affect when BNB begins earning rewards, participates in consensus and becomes available for transfer or redelegation. The description and considerations related to staking are discussed more fully in "Principal Risks-Risks Associated with BNB and the BNB Chain."

Under normal circumstances, the Sponsor will seek to stake all of the Trust's BNB except for BNB reserved by the Sponsor in its sole discretion to facilitate foreseeable redemption transactions, pay Trust expenses or otherwise protect the Trust and its assets.

Because peer-to-peer transfers of BNB are recorded on the BNB Chain, which is a digital public recordkeeping system or ledger, buying, holding and selling BNB is very different than buying, holding and selling more conventional instruments like cash, stocks or bonds. For example, BNB must either be acquired as a reward for participating in the validation of transactions that are added to the BNB Chain (the validation process is referred to interchangeably in this Prospectus as "validation" or "staking", the rewards are referred to as "staking rewards", and the parties performing such validation, "validators"), obtained in a peer-to-peer transaction on the BNB Chain, or purchased through an online digital asset trading platform or other intermediary, such as a broker in the institutional over-the-counter ("OTC") market. Peer-to-peer transactions may be difficult to arrange, and involve complex and potentially risky procedures around safekeeping, transferring and holding the BNB. Alternatively, purchasing BNB on an BNB trading platform requires choosing a trading platform, opening an account, and transferring funds to the trading platform in order to purchase the BNB. Transactions on centralized trading platforms are not ordinarily recorded on the BNB Chain. There are currently a large number of BNB trading platforms from which to choose, the quality and reliability of which varies significantly. Some trading platforms have been subject to hacks, resulting in significant losses to end users.

The Trust provides direct exposure to BNB and the Shares of the Trust are valued on a daily basis using prices drawn from a carefully evaluated group of trading platforms selected by MarketVector, which utilizes the [     ] data to construct the MarketVectorTM [     ]. The Trust provides investors with the opportunity to access the market for BNB through Shares held in a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring BNB directly, acquiring it from an exchange, or participating in staking and receiving BNB as a reward as referenced above (to the extent the Sponsor determines to stake a portion of the Trust's BNB). The Trust will custody its BNB at [     ] (the "BNB Custodian"), a regulated third-party custodian that carries insurance and is chartered as a limited purpose trust company under the New York Banking Law. The Trust will also custody its BNB at [     ] (the "Additional BNB Custodian"), a regulated third-party custodian that carries insurance and is chartered as a limited purpose trust company under the New York Banking Law. 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.

Except as set forth in the Trust Agreement, 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 collectively maintained by a global user base. The BNB Chain enables users to exchange tokens of value, called BNB, which are recorded on a public transaction ledger known as a blockchain. BNB may be used to pay for goods and services, including computational power on the BNB Chain, or it may 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.

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 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