VanEck Solana ETF (VSOL) risk factors, FY2025 10-K

Other

1. 01Risks Associated with SOL And The Solana Network
2. 02The Value Of The Shares Depends On The Development And Acceptance Of The Solana Network. The Slowing Or Stopping Of The Development Or Acceptance Of The Solana Network May Adversely Affect An Investment In The Trust
3. 03The Solana Protocol Was Only Conceived In 2017 And The Solana Protocol Or Its Proof-of-History Timestamping Mechanism May Not Function As Intended, Which Could Have An Adverse Impact On The Value Of SOL And An Investment In The Shares
4. 04On September 14, 2021, the Solana Network experienced a significant disruption, later attributed to a type of denial of service attack, and was offline for 17 hours, only returning to full functionality 24 hours later. During the restart, a second integer overflow bug was discovered and patched
5. 05In June 2022, the Solana Network experienced a bug with so-called “durable nonce” transactions leading to consensus failures. The Solana Network was offline for at least two and a half hours
6. 06In February 2024, the Agave client software implementation experienced a bug affecting its compiler. The Solana Network was offline for around five (5) hours
7. 07Digital Assets Represent A New And Rapidly Evolving Industry, And The Value Of The Shares Depends On The Acceptance Of SOL
8. 08Due To The Nature Of Private Keys, SOL Transactions Are Irrevocable And Stolen Or Incorrectly Transferred SOL May Be Irretrievable. As A Result, Any Incorrectly Executed SOL Transactions Could Adversely Affect An Investment In The Trust
9. 09amounts or to unauthorized third parties, or to uncontrolled accounts. To the extent that the Trust is unable to successfully seek redress for such error or theft, such loss could adversely affect an investment in the Trust
10. 10A Disruption Of The Internet May Affect Solana Operations, Which May Adversely Affect The SOL Industry And An Investment In The Trust
11. 11The Solana Network’s Decentralized Governance Structure May Negatively Affect Its Ability To Grow And Respond To Challenges
12. 12Digital Asset Networks Are Developed By A Diverse Set Of Contributors And The Perception That Certain High-Profile Contributors Will No Longer Contribute To The Network Could Have An Adverse Effect On The Market Price Of The Related Digital Asset
13. 13Digital Assets May Have Concentrated Ownership And Large Sales Or Distributions By Holders Of Such Digital Assets, Or Any Ability To Participate In Or Otherwise Influence A Digital Asset’s Underlying Network Could Have An Adverse Effect On The Market Price Of Such Digital Asset
14. 14The Solana Blockchain Could Be Vulnerable To Centralization Concerns Which Could Adversely Affect The Security And Stability of the Solana Network As Well As The Value Of The Shares
15. 15Shares.” Although a new client called Firedancer created by a third party is being developed, it is not currently operational outside of a testnet environment
16. 16A Temporary Or Permanent “Fork” Or A “Clone” Of The Solana Blockchain Could Adversely Affect The Value Of The Shares
17. 17attracted less validating power, thereby making digital asset networks that rely on proof-of-stake more susceptible to attack
18. 18Shareholders May Not Receive The Benefits Of Any Forks Or “Airdrops.”
19. 19In The Event Of A Hard Fork Of The Solana Network, The Sponsor Will, If Permitted By The Terms Of The Trust Agreement, Use Its Discretion To Determine Which Network Should Be Considered The Appropriate Network For The Trust’s Purposes, And In Doing So May Adversely Affect The Value Of The Shares
20. 20Any Name Change And Any Associated Rebranding Initiative By The Core Developers Of SOL May Not Be Favorably Received By The Digital Asset Community, Which Could Negatively Impact The Value Of SOL And The Value Of The Shares
21. 21The Solana Blockchain Could Be Vulnerable To Attacks on Transaction Finality and Consensus Processes, Which Could Adversely Affect An Investment In The Trust Or The Ability Of The Trust To Operate
22. 22If Validators Exit The Solana Network, It Could Increase The Likelihood Of A Malicious Actor Obtaining Control
23. 23Blockchain Technologies Are Based On Theoretical Conjectures As To The Impossibility Of Solving Certain Cryptographical Puzzles Quickly. These Premises May Be Incorrect Or May Become Incorrect Due To Technological Advances
24. 24The Price Of SOL On The SOL Market Has Exhibited Periods Of Extreme Volatility, Which Could Have A Negative Impact On The Performance Of The Trust
25. 25MarketVector Has Analyzed SOL Trading Platform Data And Developed Insights That Have Informed MarketVector’s Understanding Of The SOL Market And The Design Of The Trust. If Such Data Or Insights Are Inaccurate Or Incorrect, The Value Of An Investment In The Trust May Be Adversely Affected
26. 26Smart Contracts, Including Those Relating To DeFi Applications, Are A New Technology, And Their Ongoing Development And Operation May Result In Problems, Which Could Reduce The Demand For SOL Or Cause A Wider Loss Of Confidence In The Solana Network, Either Of Which Could Have An Adverse Impact On The Value Of SOL
27. 27Popular Decentralized Applications Running On Solana May Cease To Operate Or May Migrate To Competing Blockchains, Which May Negatively Impact The Price Of SOL And Make The Solana Network Less Attractive
28. 28Validation On The Solana Network Is Subject to Risks, Including Staking Liquidity And Operational Uncertainty On The Solana Network
29. 29Proof-Of-Stake Blockchains Are A Relatively Recent Innovation, And Have Not Been Subject To As Widespread Use Or Adoption Over As Long A Period Of Time As Traditional Proof-Of-Work Blockchains
30. 30Unlike Some Digital Assets, Which Have A Limit On Outstanding Supply, There Is No Limit On SOL Supply
31. 31Operational Cost May Exceed The Award For Validating Transaction, And Increased Transaction Fees May Adversely Affect The Usage Of The Solana Network
32. 32As a result of SOL’s fee burning mechanism, the incentives for validators to validate transactions with higher gas fees are reduced, since those validators would not receive those gas fees
33. 33The Trust may be adversely affected by delays in deactivating of its staked assets if a large validator or the Staking Services Provider initiates a mass exit from the Solana Network
34. 34Recent Developments In The Digital Asset Economy Have Led To Extreme Volatility And Disruption In Digital Asset Markets, A Loss Of Confidence In Participants Of The Digital Asset Ecosystem, Significant Negative Publicity Surrounding Digital Assets Broadly And Market-Wide Declines In Liquidity
35. 35The Value Of The Shares Relates Directly To The Value Of SOL, The Value Of Which May Be Highly Volatile And Subject To Fluctuations Due To A Number Of Factors
36. 36Digital Asset Networks Face Significant Scaling Challenges, And Efforts To Increase The Volume and Speed Of Transactions May Not Be Successful
37. 37There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of Solana Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of the Shares
38. 38issuers who seek the most liquid and high-volume trading platforms on which to list their coins. Although these reports concerned bitcoin, it is possible that similar concerns are present for SOL markets as well
39. 39SOL Trading Platforms May Be Exposed To Fraud And Manipulation
40. 40SOL Trading Platforms May Be Exposed To Front-Running
41. 41SOL Trading Platforms May Be Exposed To Wash Trading
42. 42Competition From Central Bank Digital Currencies And Emerging Payments Initiatives Involving Financial Institutions Could Adversely Affect The Value Of SOL And Other Digital Assets
43. 43Prices Of SOL May Be Affected Due To Stablecoins (Including Tether And US Dollar Coin (“USDC”)), The Activities Of Stablecoin Issuers And Their Regulatory Treatment
44. 44Competition From The Emergence Or Growth Of Other Digital Assets Or Methods Of Investing In SOL Could Have A Negative Impact On The Price Of SOL And Adversely Affect The Value Of The Shares
45. 45The Digital Asset Markets Follow Trends, Certain Trends May Favor Certain Blockchains Over Others, A Trend Change Could Affect The Popularity Of The Solana Blockchain
46. 46Congestion Or Delay On The Solana Network May Delay Purchases Or Sales Of SOL By The Trust
47. 47The SEC may approve applications under Rule 19b-4 of the Exchange Act to list competing digital assets as exchange-traded products, which could reduce demand for, and the price of, SOL and adversely impact the value of the Shares
48. 48Failure Of Funds That Hold Digital Assets To Receive SEC Approval To List Their Shares On Exchanges Could Adversely Affect The Value Of The Shares
49. 49Digital Asset Treasury Companies’ Risk
50. 50The MarketVector Solana Benchmark Rate Has A Limited History
51. 51The MarketVector Solana Benchmark Rate Could Fail To Track The Global SOL Price, And A Failure Of The MarketVector Solana Benchmark Rate Could Adversely Affect The Value Of The Shares
52. 52The MarketVector Solana Benchmark Rate Used To Calculate The Value Of The Trust’s SOL May Be Volatile, Adversely Affecting The Value Of The Shares
53. 53The MarketVector Solana Benchmark Rate May Be Affected By Manipulative Or Fraudulent Practices In The Global SOL Market Or At Constituent Trading Platforms
54. 54The Index Administrator Could Experience System Failures Or Errors
55. 55The Sponsor Can Remove The MarketVector Solana Benchmark Rate And Use A Different Pricing Or Valuation Methodology Instead
56. 56Intellectual Property Rights Claims May Adversely Affect The Trust And The Value Of The Shares
57. 57The Value Of The Shares May Be Influenced By A Variety Of Factors Unrelated To The Value Of SOL
58. 58The Trust Is Subject To Market Risk
59. 59An Investment In Shares Of The Trust Is Different From Directly Owning SOL
60. 60Redemption Liquidity Risk
61. 61The NAV May Not Always Correspond To The Market Price Of SOL And, As A Result, Baskets May Be Created Or Redeemed At A Value That Is Different From The Market Price Of The Shares
62. 62Authorized Participants’ Buying And Selling Activity Associated With The Creation And Redemption Of Baskets May Adversely Affect An Investment In The Shares Of The Trust
63. 63The Inability Of Liquidity Providers, And Authorized Participants Or Their Designees To Hedge Their SOL Exposure May Adversely Affect The Liquidity Of Shares And The Value Of An Investment In The Shares
64. 64The Lack Of Ability To Facilitate In-Kind Creations And Redemptions Of Shares Could Have Adverse Consequences For The Trust
65. 65The Liquidity Of The Shares May Also Be Affected By The Withdrawal From Participation Of Authorized Participants Or Liquidity Providers
66. 66The Trust Is Subject To Risks Due To Its Concentration Of Investments In A Single Asset Class
67. 67The Lack Of Active Trading Markets For The Shares Of The Trust May Result In Losses On Shareholders’ Investments At The Time Of Disposition Of Shares
68. 68Possible Illiquid Markets May Exacerbate Losses, Increase The Variability Between The Trust’s NAV And Its Market Price Or Affect the Trust’s Ability to Meet Cash Creation Orders and Redemption Orders
69. 69The Shares May Trade At A Price That Is At, Above Or Below The Trust’s NAV Per Share As A Result Of The Non-Current Trading Hours Between The Exchange And The Digital Asset Market
70. 70The Trust Is An “Emerging Growth Company” And It Cannot Be Certain If The Reduced Disclosure Requirements Applicable To Emerging Growth Companies Will Make The Shares Less Attractive To Investors
71. 71Several Factors May Affect The Trust’s Ability To Achieve Its Investment Objective On A Consistent Basis
72. 72The Amount Of SOL Represented By Each Share Will Decline Over Time As The Trust Pays The Sponsor’s Fee And Extraordinary Trust Expenses, And As A Result, The Value Of The Shares May Decrease Over Time
73. 73The Trust Is A Passive Investment Vehicle. The Trust Is Not Actively Managed And Will Be Affected By A General Decline In The Price Of SOL
74. 74The Development And Commercialization Of The Trust Is Subject To Competitive Pressures
75. 75Security Threats To The Trust’s Accounts With The SOL Custodian Or The Additional SOL Custodian Could Result In The Halting Of Trust Operations And A Loss Of Trust Assets Or Damage To The Reputation Of The Trust, Each Of Which Could Result In A Reduction In The Price Of The Shares
76. 76The Clearing Account Permits Hot Storage Which Is Less Secure Than Cold Storage
77. 77cooperation and recognized Gemini’s engagement with the NYDFS on the matters identified in the NYDFS Settlement and its ongoing efforts to remediate the shortcomings identified in the NYDFS Settlement and during the NYDFS’ most recent examination of Gemini
78. 78While this closure reduces immediate litigation risk associated with Gemini Earn, regulatory scrutiny of digital asset platforms remains ongoing and subject to change. The Trust may be indirectly affected by future actions involving Gemini
79. 79the Exchange Act or Securities Act, disgorgement, civil monetary penalties and such other relief as the court deems appropriate or necessary. In March 2025, the SEC moved to dismiss the complaint, which the court granted
80. 80Loss Of A Critical Banking Relationship For, Or The Failure Of A Bank Used By, The Trust Could Adversely Impact The Trust’s Ability To Create Or Redeem Baskets, Or Could Cause Losses To The Trust
81. 81The Lack Of Full Insurance And Shareholders’ Limited Rights Of Legal Recourse Against The Trust, Trustee, Sponsor, Administrator, Cash Custodian, SOL Custodian And Additional SOL Custodian Expose The Trust And Its Shareholders To The Risk Of Loss Of The Trust’s SOL For Which No Person Or Entity Is Liable
82. 82provision shall not apply in respect of System Failures or Downtime, which are subject to other respective provisions of the Custody Agreement. The occurrence of an event described in the Force Majeure provision shall not affect the validity and enforceability of any remaining provisions of the Custody Agreement
83. 83The Trust May Be Required, Or The Sponsor May Deem It Appropriate, To Terminate And Liquidate At A Time That Is Disadvantageous To Shareholders
84. 84The Sponsor Is Solely Responsible For Determining The Value Of The SOL Holdings And SOL Holdings Per Share, And Any Errors, Discontinuance Or Changes In Such Valuation Calculations May Have An Adverse Effect On The Value Of The Shares
85. 85Extraordinary Expenses Resulting From Unanticipated Events May Become Payable By The Trust, Adversely Affecting The Value Of The Shares
86. 86The Value Of The Shares Will Be Adversely Affected If The Trust Is Required To Indemnify The Sponsor, The Trustee, The Transfer Agent, The SOL Custodian, The Additional SOL Custodian Or The Cash Custodian Under The Trust Documents
87. 87Coinbase Serves As The SOL Custodian For Several Competing Exchange-Traded SOL Products, Which Could Adversely Affect The Trust’s Operations And Ultimately The Value Of The Shares
88. 88Fees are paid to validators that participate in the consensus and propose new blocks on the blockchain and other validators earn much lower fees for attesting to each block. Validators perform both roles on a continuous basis and are called upon on a basis determined by the protocol

Regulatory Risk

1. 89SOL’s Initial Manner Of Sale May Resemble That Of Certain Digital Assets Found To Be Securities, And A Determination That SOL Is A “Security” May Adversely Affect The Value Of SOL And An Investment In The Shares And Result In Potentially Extraordinary, Nonrecurring Expenses To, Or Termination Of, The Trust
2. 90Depending on its characteristics, a digital asset may be considered a “security” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict
3. 91Changes In SEC Policy Could Adversely Impact The Value Of The Shares
4. 92Competing Industries May Have More Influence With Policymakers Than The Digital Asset Industry, Which Could Lead To The Adoption Of Laws And Regulations That Are Harmful To The Digital Asset Industry
5. 93Shareholders Do Not Have The Protections Associated With Ownership Of Shares In An Investment Company Registered Under The 1940 Act Or The Protections Afforded By The CEA
6. 94The Trust is not registered as an investment company under the 1940 Act, and the Sponsor believes that the Trust is not required to register under such act. Consequently, Shareholders do not have the regulatory protections provided to investors in investment companies
7. 95Future Legal Or Regulatory Developments May Negatively Affect The Value Of SOL Or Require The Trust Or The Sponsor To Become Registered With The SEC Or CFTC, Which May Cause The Trust To Liquidate
8. 96Further, the proposed amendments could have a severe negative impact on the price of SOL and therefore the value of the Shares if enacted, by, among other things, making it more difficult for investors to gain access to SOL, or causing certain holders of SOL to sell their holdings
9. 97Anonymity, Sanctions And Illicit Financing Risk
10. 98Regulatory Changes Or Actions In Foreign Jurisdictions May Affect The Value Of The Shares Or Restrict The Use Of SOL, Staking Activity Or The Operation Of Their Networks Or The Global SOL Markets In A Manner That Adversely Affects The Value Of The Shares

Tax Risk

1. 99The Treatment Of The Trust For U.S. Federal Income Tax Purposes Is Uncertain
2. 100The Trust may take certain positions with respect to the tax consequences of Staking Activities, Incidental Rights and IR Virtual Currency. If the IRS were to disagree with, and successfully challenge, any of these positions, the Trust might not qualify as a grantor trust
3. 101The Treatment Of Digital Currency And Staking Activities For U.S. Federal Income Tax Purposes Is Uncertain
4. 102Future Developments Regarding The Treatment Of Digital Currency And Staking Activities For U.S. Federal Income Tax Purposes Could Adversely Affect The Value Of The Shares
5. 103Future Developments In The Treatment Of Digital Currency For Tax Purposes Other Than U.S. Federal Income Tax Purposes Could Adversely Affect The Value Of The Shares
6. 104A U.S. Tax-Exempt Shareholder May Recognize “Unrelated Business Taxable Income” As A Consequence Of An Investment In Shares
7. 105Shareholders Could Incur A Tax Liability Without An Associated Distribution Of The Trust
8. 106A Hard “Fork” Of The Solana Blockchain Could Result In Shareholders Incurring A Tax Liability

Other Risks

1. 107Shareholders Cannot Be Assured Of The Sponsor’s Continued Services, The Discontinuance Of Which May Be Detrimental To The Trust
2. 108Shareholders cannot be assured that the Sponsor will be willing or able to continue to serve as the sponsor to the Trust for any length of time. If the Sponsor discontinues its activities on behalf of the Trust and a substitute sponsor is not appointed, the Trust will terminate and liquidate its SOL
3. 109Although The SOL Custodian And The Additional SOL Custodian Are Fiduciaries With Respect To The Trust’s Assets, They Could Resign Or Be Removed By The Sponsor, Which May Trigger Early Dissolution Of The Trust
4. 110Shareholders May Be Adversely Affected By The Lack Of Independent Advisers Representing Investors In The Trust
5. 111Shareholders And Authorized Participants Lack The Right Under The Custody Agreement To Assert Claims Directly Against The SOL Custodian, Which Significantly Limits Their Options For Recourse
6. 112The Exchange On Which The Shares Are Listed May Halt Trading In The Trust’s Shares, Which Would Adversely Impact A Shareholder’s Ability To Sell Shares
7. 113The Liquidity Of The Shares May Also Be Affected By The Withdrawal From Participation Of Authorized Participants, Which Could Adversely Affect The Market Price Of The Shares
8. 114The Market Infrastructure Of The SOL Spot Market Could Result In The Absence Of Active Authorized Participants Able To Support The Trading Activity Of The Trust
9. 115SOL Spot Exchanges Are Not Subject To Same Regulatory Oversight As Traditional Equity Exchanges, Which Could Negatively Impact The Ability Of Authorized Participants To Implement Arbitrage Mechanisms
10. 116Shareholders That Are Not Authorized Participants May Only Purchase Or Sell Their Shares In Secondary Trading Markets, And The Conditions Associated With Trading In Secondary Markets May Adversely Affect Shareholders’ Investment In The Shares
11. 117As The Sponsor And Its Management Have Limited History Of Operating Investment Vehicles Like The Trust, Their Experience May Be Inadequate Or Unsuitable To Manage The Trust
12. 118Security Threats To The Trust’s Accounts With The SOL Custodian and the Additional SOL Custodian Could Result In The Halting Of Trust Operations And A Loss Of Trust Assets Or Damage To The Reputation Of The Trust, Each Of Which Could Result In A Reduction In The Price Of The Shares
13. 119The Sponsor Is Leanly Staffed And Relies Heavily On Key Personnel
14. 120The Trust Is New, And If It Is Not Profitable, The Trust May Terminate And Liquidate At A Time That Is Disadvantageous To Shareholders
15. 121Shareholders Do Not Have The Rights Enjoyed By Investors In Certain Other Vehicles And May Be Adversely Affected By A Lack Of Statutory Rights And By Limited Voting And Distribution Rights
16. 122The Trust Agreement Includes Provisions That Limit Shareholders’ Voting Rights And Restrict Shareholders’ Right To Bring A Derivative Action
17. 123An Investment In The Trust May Be Adversely Affected By Competition From Other Investment Vehicles Focused On SOL Or Other Cryptocurrencies
18. 124Shareholders May Be Adversely Affected By Creation Or Redemption Orders That Are Subject To Postponement, Suspension Or Rejection Under Certain Circumstances
19. 125Shareholders May Be Adversely Affected By An Overstatement Or Understatement Of The NAV Calculation Of The Trust Due To The Valuation Method Employed On The Date Of The NAV Calculation
20. 126The Liability Of The Sponsor And The Trustee Is Limited, And The Value Of The Shares Will Be Adversely Affected If The Trust Is Required To Indemnify The Trustee Or The Sponsor
21. 127Due To The Increased Use Of Technologies, Intentional And Unintentional Cyberattacks Pose Operational And Information Security Risks
22. 128The Trust And Its Service Providers Are Subject To Certain Operational Risks
23. 129Risk Factors Related to ERISA