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Item 1A. Risk Factors

2026-05-15 compared with 2025-12-31 · 109 added, 75 removed, 1 unchanged (99% of the section changed)

You should carefully consider the risk factors discussed below as well as the risk factors discussed in “Risk Factors” in

our Registration Statement on Form S-1 (333-280557) declared effective on November 18, 2025, which could materially affect our business,

financial condition or future results.

There have been no material changes in our risk factors from those disclosed therein.

The risks described below and in our Prospectus are not the only risks facing the Trust.

You should also consider any risks and uncertainties

described under the caption “Risk Factors” in any applicable prospectus, prospectus supplement, registration statement or

other document that we file with the SEC before or after this date.

Additional risks and uncertainties not currently known to us or that

we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

exclusive jurisdiction for certain types of actions and proceedings and waiver of trial by jury clauses set forth in the Trust Agreement

may have the effect of limiting a Shareholder’s rights to bring legal action against the Trust and could limit a purchaser’s ability

to obtain a favorable judicial forum for disputes with the Trust.

The Trust Agreement provides that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware will be the

exclusive jurisdiction for any claims, suits, actions or proceedings.

The Trust has agreed that this shall not apply to causes of actions

for violations of U.S.

federal or state securities laws.

Section 22 of the Securities Act creates concurrent jurisdiction for federal

and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

By purchasing Shares in the Trust, Shareholders waive certain claims that the courts of the state of Delaware and any federal courts located

in Wilmington, Delaware is an inconvenient venue or is otherwise inappropriate.

As such, Shareholders could be required to litigate a

matter relating to the Trust in a Delaware court, even if that court may otherwise be inconvenient for the Shareholder.

The Trust Agreement also waives the right to trial by jury in any such claim, suit, action or proceeding, provided that causes of actions

for violations of the Exchange Act or the Securities Act will not be governed by the waiver of the right to trial by jury provision of

You should carefully consider

the risk factors discussed below as well as the risk factors discussed in Part I, Item 1A.

“Risk Factors” in our Annual Report,

which could materially affect our business, financial condition or future results.

Other than as described herein, there have been no

material changes in our risk factors from those disclosed in our 2025 Annual Report on Form 10-K.

The risks described below

and in our Annual Report are not the only risks facing the Trust.

You should also consider any risks and uncertainties described under

the caption “Risk Factors” in any applicable prospectus, prospectus supplement, registration statement or other document that

we file with the SEC before or after the date of this prospectus that is incorporated by reference herein.

Additional risks and uncertainties

not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition

and/or operating results.

The Trust Agreement

If a lawsuit is brought against the Trust, it may be heard only by a judge or justice of the applicable trial court,

which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have,

including results that could be less favorable to the plaintiffs in any such action.

By purchasing Shares in the Trust, Shareholders waive

a right to a trial by jury which may limit a Shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes

with the Trust.

The ongoing activities of the Trust may generate tax liabilities for Shareholders.

It is expected that each Shareholder will include in the computation of their taxable income their proportionate share of the taxable

income and expenses of the Trust, including gains and losses realized in connection with the use or sale of SOL to pay Trust expenses

or facilitate redemption transactions, as well as any amounts received in connection with staking, as applicable.

The Trust expects to

make cash distributions at least quarterly to Shareholders, but even if it did not, any tax liability that a Shareholder incurs as a result

of holding Shares will need to be satisfied from some other source of funds.

If a Shareholder sells Shares in order to raise funds to

satisfy such a tax liability, the sale itself may generate additional taxable gain or loss.

SOL staking may result

in adverse tax consequences for Shareholders.

To the extent the Sponsor determines to stake a portion of the Trust’s SOL, the staking of the Trust’s SOL is expected to result in the

Trust’s receipt of amounts received in connection with staking in the form of additional SOL.

Any such rewards are expected to be treated

as ordinary income for U.S.

federal income tax purposes.

Thus, the Trust’s receipt of rewards derived from SOL staking activities could

result in beneficial owners of Shares incurring tax liability which may not correspond in amount or timing with a cash distribution from

Additionally, the Trust’s receipt of amounts received in connection with staking could have implications for investors sensitive

to unrelated business taxable income, U.S.

withholding taxes or taxable income effectively connected with a U.S.

trade or business.

federal income tax treatment of staking may change from that described in the Trust’s prospectus filed with the SEC on November 18,

2025, possibly with retroactive effect.

The treatment of staking

in a grantor trust for U.S.

federal income tax purposes is still developing.

As a grantor trust, the Trust can undertake only certain types of activities.

For example, generally, the Trust cannot vary its investment

portfolio to take advantage of market fluctuations.

The Trust may receive income from investment activities that do not require such decision-making.

On November 10, 2025, the Treasury Department and IRS issued guidance providing a safe harbor for certain staking activities with an investment

trust treated as a grantor trust for U.S.

federal income tax purposes.

The requirements under the safe harbor and under existing law are

subject to interpretation.

If the Trust were viewed as undertaking the types of activities that would not be allowable for U.S.

income tax purposes, then the Trust could lose its income tax status as a grantor trust, and the Trust could be reclassified as a partnership.

If the Trust were reclassified as a partnership, a more complex reporting regime would apply, and Shareholders would receive a Form K-1.

If the Trust were reclassified as a partnership but did not satisfy a safe harbor or exception to the publicly traded partnership rules,

it could be reclassified as a corporation, which would subject the Trust to corporate level tax, and the Shareholder’s return on investment

would likely be affected.

includes a provision restricting Shareholders’ right to bring a derivative action.

Under Section 7.4 of the Trust

Agreement, Shareholders’ statutory right under Delaware law to bring a derivative action (i.e., to initiate a lawsuit in the name

of the Trust in order to assert a claim belonging to the Trust against a fiduciary of the Trust or against a third-party when the Trust’s

management has refused to do so) is restricted.

Under Delaware law, a shareholder may bring a derivative action if the shareholder is

a shareholder at the time the action is brought and either (i) was a shareholder at the time of the transaction at issue or (ii) acquired

the status of shareholder by operation of law or the Trust’s governing instrument from a person who was a shareholder at the time

of the transaction at issue.

Additionally, Section 3816(e) of the Delaware Statutory Trust Act specifically provides that a “beneficial

owner’s right to bring a derivative action may be subject to such additional standards and restrictions, if any, as are set forth

in the governing instrument of the statutory trust, including, without limitation, the requirement that beneficial owners owning a specified

beneficial interest in the statutory trust join in the bringing of the derivative action.” In addition to the requirements of applicable

law and in accordance with Section 3816(e) of the Delaware Statutory Trust Act, the Trust Agreement provides that no Shareholder will

have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two

or more Shareholders who are eligible to bring such derivative action under the Delaware Trust Statute and who (i) are not “Affiliates”

(as defined in the Trust Agreement and below) of one another and (ii) collectively hold at least 10% of the outstanding Shares join in

the bringing or maintaining of such action, suit or other proceeding.

“Affiliate” means (i) any Person directly or indirectly

owning, controlling or holding with power to vote 10% or more of the outstanding voting securities of such Person, (ii) any Person 10%

or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such Person,

(iii) any Person, directly or indirectly, controlling, controlled by or under common control of such Person, (iv) any employee, officer,

director, member, manager or partner of such Person, or (v) if such Person is an employee, officer, director, member, manager or partner,

any Person for which such Person acts in any such capacity;

and “Person” means any natural person and any partnership, limited

liability company, statutory trust, corporation, association, or other legal entity.

In addition to the 10% ownership

threshold described above, the Trust Agreement imposes the following further procedural conditions on any Shareholder seeking to bring

a derivative action on behalf of the Trust:

(1) prior to bringing any such action, two or more non-affiliated Shareholders collectively

holding at least 10% of the outstanding Shares must first make a pre-suit demand upon the Sponsor to bring the subject action, unless

an effort to cause the Sponsor to bring such an action is not likely to succeed (a demand shall only be deemed not likely to succeed,

and therefore excused, if the Sponsor has a personal financial interest in the transaction at issue, and the Sponsor shall not be deemed

interested in a transaction or otherwise disqualified from ruling on the merits of a Shareholder demand by virtue of the fact that the

Sponsor receives remuneration for his or her service as Sponsor of the Trust or as a trustee or director of one or more trusts that are

under common management with or otherwise affiliated with the Trust);

and (2) unless a demand is excused pursuant to clause (1) of this

paragraph, the Sponsor must be afforded a reasonable amount of time to consider such Shareholder request and to investigate the basis

of such claim and the Sponsor shall be entitled to retain counsel or other advisors in considering the merits of the request, and the

Sponsor shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisor

in the event the Sponsor determines not to take action.

Any decision by the Sponsor to bring, maintain, or compromise (or not to bring,

maintain, or compromise) any such court action, proceeding or claim, or to submit the matter to a vote of Shareholders, shall be made

by the Sponsor in good faith and shall be binding upon the Shareholders.

In addition to claims that must be brought derivatively under

applicable law, the Trust Agreement requires that any claim affecting all Shareholders of the Trust proportionately, based on their number

of Shares of the Trust, must also be brought as a derivative claim subject to these conditions, regardless of whether such claim involves

a violation of a Shareholder’s rights under the Trust Agreement or any other alleged violation of contractual or individual rights

that might otherwise give rise to a direct claim (and regardless, in each case, of whether such claims sound in tort, fraud or otherwise,

or are based on common law, statutory, equitable, legal or other grounds).

These provisions apply to

any derivative actions brought in the name of the Trust other than derivative claims brought under the federal U.S.

securities laws and

the rules and regulations thereunder.

The enforceability of Section 7.04’s derivative action threshold and procedural requirements

under applicable federal or state law has not been definitively established.

The 10% ownership threshold and procedural requirements represent

contractual restrictions on derivative actions authorized by Section 3816(e) of the Delaware Statutory Trust Act, which expressly permits

trust instruments to modify or restrict the rights of beneficial owners to bring derivative actions.

However, the application of such

a threshold in the context of a registered exchange-traded product has not been comprehensively addressed by the courts.

it is possible that a court could decline to enforce the Trust’s 10% threshold and procedural requirements.

A Shareholder wishing to bring

a derivative action on behalf of the Trust must satisfy both the 10% ownership threshold and the pre-suit demand process described above

before commencing any such action, suit or other proceeding, further limiting the ability of a Shareholder to seek redress in the name

of the Trust.

Due to these additional requirements, a Shareholder attempting to bring or maintain a derivative action in the name of the

Trust will be required to locate other Shareholders with which it is not affiliated and that have sufficient Shares to meet the 10% threshold

based on the number of Shares outstanding on the date the claim is brought and thereafter throughout the duration of the action, suit

or proceeding.

Shareholders wishing to satisfy this ownership threshold would need to identify and coordinate with other Shareholders

of the Trust.

Because the Trust’s Shares are held in book-entry form through the DTC and beneficial ownership information is not

publicly available, individual investors may face substantial difficulty in locating other Shareholders.

There is no mechanism established

by the Trust to facilitate such shareholder coordination, and the Trust is not required to assist Shareholders in identifying one another.

Accordingly, even Shareholders who believe they have a legitimate derivative claim may, as a practical matter, be unable to satisfy the

10% threshold and bring an action.

Even if successful, this may be difficult and may result in increased costs to a Shareholder attempting

to seek redress in the name of the Trust in court.

Moreover, if Shareholders

bringing a derivative action, suit or proceeding pursuant to this provision of the Trust Agreement do not hold 10% of the outstanding

Shares on the date such an action, suit or proceeding is brought, or such Shareholders are unable to maintain Share ownership meeting

the 10% threshold throughout the duration of the action, suit or proceeding, such Shareholders’ derivative action may be subject

to dismissal.

As a result, the Trust Agreement limits the likelihood that a Shareholder will be able to successfully assert a derivative

action in the name of the Trust, even if such Shareholder believes that he or she has a valid derivative action, suit or other proceeding

to bring on behalf of the Trust.

Because the Trust’s

Shares are held in book-entry form through DTC, the beneficial owners of Shares are generally not reflected on the Trust’s share

Accordingly, any shareholder or group of Shareholders seeking to establish that they collectively hold at least 10% of the outstanding

Shares must provide documentary evidence of their beneficial ownership as of the date of the derivative demand.

Acceptable evidence may

include broker statements, DTC participant confirmations, account statements from a registered broker-dealer or bank that is a DTC participant,

or such other documentation as the Trust may reasonably require.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors