Bitwise Solana Staking ETF

Credit and liquidity · Banking relationships and credit facilities

Loss of a critical banking relationship for, or the failure of a bank used by, the Prime Execution Agent could adversely impact the Trust's ability to create or redeem Baskets, or could cause losses to the Trust, in the limited circumstances when the Trust utilizes the Agent Execution Model.

Cybersecurity and data protection · Third party data security and vendors

Cyber security failures or breaches of one or more of the Trust's service providers (including, but not limited to, the Transfer Agent, the Marketing Agent, the Administrator, the Cash Custodian, the Solana Custodian or an Authorized Participant) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage.

Cybersecurity and data protection · Insider threats and access controls

The security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of the Sponsor, Prime Execution Agent, Solana Custodian, or otherwise, and, as a result, an unauthorized party may obtain access to the Trust Solana Accounts with the Solana Custodian or the Trust's Trading Balance with the Prime Execution Agent.

Digital transformation and innovation · Technology obsolescence and evolution

Solana is a relatively new technological innovation with a limited operating history. The Solana network may not function as intended, which could have an adverse impact on the value of solana therefore the value of Shares.

Cybersecurity and data protection · Data breaches and cyber attacks

Security breaches, cyber-attacks, computer malware and computer hacking attacks have been a prevalent concern in relation to digital assets. Multiple thefts of solana and other digital assets from other holders have occurred in the past. Because of the pseudonymous nature of the Solana network, thefts can be difficult to trace, which may make solana a particularly attractive target for theft.

Information management · Technology vendor dependence

The Sponsor may need to find and appoint a replacement Solana Custodian or Cash Custodian quickly, which could pose a challenge to the safekeeping of the Trust's solana and cash.

Social and demographic · Public perception and reputation

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

Geopolitical and trade · Regulatory and policy uncertainty

It is not possible to predict whether the U.S. Congress will grant additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how they might impact the ability of digital assets markets to function or how any new regulations that may flow from such authorities might impact the value of digital assets generally and solana held by the Trust specifically.

Economic and market conditions · Market volatility and financial crises

Recent 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.

Industry regulation · Licensing and permits

Under regulations from the New York State Department of Financial Services ("NYDFS"), businesses involved in certain digital asset business activity involving New York or a New York resident must apply for a license, commonly known as a BitLicense, from the NYDFS and must comply with anti-money laundering, cyber security, consumer protection, and financial and reporting requirements.

Industry regulation · Regulatory compliance and changes

A determination that solana or any other digital asset is a "security" may adversely affect the price of solana and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust. Depending on its characteristics, a digital asset, including solana, may be considered a "security" under U.S. federal securities laws.

Tax and financial reporting · Tax compliance and changes in tax law

The tax treatment of digital assets is still evolving and subject to change. Current IRS guidance indicates that solana should be treated as property for federal income tax purposes and that transactions involving the exchange of solana in return for goods and services should be treated as barter exchanges. However, because solana is a new technological innovation, the U.S. federal income tax treatment of an investment in solana may evolve and change.

Market position and competition · Disruptive competitors and new market entrants

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 Solana network.

Customer and revenue · Revenue concentration in specific products or segments

The Trust is subject to risks due to its concentration of investments in a single asset class. Unlike other funds that may invest in diversified assets, the Trust's investment strategy is concentrated in a single asset class: solana.

Market position and competition · Market cyclicality and demand volatility

The price of solana may be affected due to stablecoins (including Tether and USDC), the activities of stablecoin issuers and their regulatory treatment. While the Trust does not invest in and will not hold stablecoins, it may nonetheless be exposed to risks that stablecoins pose for the solana market and other digital asset markets.

Supply chain and procurement · Supplier financial distress and capability

The insolvency of the Solana Custodian or of any broker, custodian bank or clearing corporation used by the Solana Custodian, may result in the loss of all or a substantial portion of the Trust's assets or in a significant delay in the Trust having access to those assets.

Supply chain and procurement · Supplier operation and dependance

The Trust is dependent on the Solana Custodian, which is Coinbase Custody, and to a lesser extent, the Prime Execution Agent, Coinbase Inc. to operate. Coinbase Custody performs essential functions in terms of safekeeping the Trust's solana in the Trust Solana Accounts, and its affiliate, Coinbase Inc., in its capacity as Prime Execution Agent.

Human capital and workforce · Key personnel dependence and succession

The Sponsor is leanly staffed and relies heavily on key personnel to manage its activities. These key personnel intend to allocate their time managing the Trust in a manner that they deem appropriate. If such key personnel were to leave or be unable to carry out their present responsibilities, it may have an adverse effect on the management of the Sponsor.

Corporate governance · Internal controls and risk management

The Trust's risk management processes and policies may prove to not be adequate to prevent any loss of the Trust's solana. Despite the number of security procedures that the Sponsor, Solana Custodian and Prime Execution Agent employ, it is impossible to guarantee the prevention of any loss due to a security breach, software defect, act of God, pandemic or riot that may be borne by the Trust.

Organizational and management · Leadership and management changes

In the event a high-profile contributor to the Solana network, such as Anatoly Yakovenko, is perceived as no longer contributing to the Solana network due to death, retirement, withdrawal, incapacity, or otherwise, whether or not such perception is valid, it could negatively affect the price of solana, which could adversely impact the value of the Shares.