Note 9 – RISK AND UNCERTAINTIES

The Trust is subject to a variety of risks inherent in its investment activities, including risks associated with crypto asset markets, price volatility, liquidity, regulatory and operational risks, and its concentration in crypto assets, which may be subject to significant speculation and price variability.

The Trust invests primarily in crypto assets, which are relatively new technological innovations with limited operating histories and are subject to a high degree of price variability. The prices of crypto assets have exhibited periods of extreme volatility and may be influenced by factors such as trading activity, market sentiment, regulatory scrutiny, and developments relating to the underlying blockchain networks. The markets for crypto assets may experience significant disruption, including the failure of market participants, loss of confidence, and declines in liquidity, which may adversely affect the value of the Trust’s shares. In addition, the value of crypto assets and, in turn, the value of the Trust’s shares, may be adversely affected by factors such as changes in global supply and demand, negative market perception, manipulative trading practices, and a loss of investor confidence. Significant or prolonged declines in the price of crypto assets could have a material adverse effect on the value of the Trust’s shares, and the Trust’s shares could lose a substantial portion or all of their value.

In addition, crypto asset networks are subject to technological and cybersecurity risks, including protocol changes, hard forks, cyberattacks, and system breaches, which could result in the loss, theft, or destruction of crypto assets and may adversely affect their functionality, demand, and valuation. Due to the nature of private keys, the crypto asset transactions are irrevocable and incorrectly transferred or stolen crypto assets may be irretrievable, and as a result, any incorrectly executed transaction could adversely affect the price and liquidity of the crypto assets, which may indirectly affect the price of the Trust’s shares. The loss or destruction of a private key required to access the Trust’s crypto assets may be irreversible. Further, the cryptographic protocols underlying crypto assets could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective, which may undermine the security of such assets and increase vulnerability to theft or manipulation. Advances in artificial intelligence technologies may further increase cybersecurity risks by enhancing the ability of malicious actors to identify and exploit vulnerabilities in crypto asset networks, information systems, software code, or cryptographic protocols.

The regulatory environment for crypto assets remains uncertain and continues to evolve domestically and globally. Regulatory developments, including the potential banning, restricting or imposing of onerous conditions or prohibitions on the use of crypto assets, mining activity, digital wallets, the provision of services related to trading and custody of crypto

assets, the operation of the underlying blockchain networks, or the crypto asset markets generally may adversely impact the value of the crypto assets and, therefore, of the Trust’s shares. A potential determination that a crypto asset constitutes a security, rather than a commodity, or is otherwise subject to additional regulation, could materially and adversely affect the Trust’s operations and the value of its holdings. The Trust also depends on service providers, including the Administrator, Custodians, Authorized Participants, and other intermediaries, and is subject to risks associated with their performance, as well as liquidity, valuation, and operational risks, including potential losses from cyber incidents, failures of trading platforms, or disruptions in the creation and redemption process.