and the security of the Trust’s SUI, as well as to address governmental, policy or regulatory concerns. Staking would introduce a risk of loss of SUI, which may include penalties, slashing and inactivity leaks, and would require dependency on third parties to effectively execute the Trust’s Staking Arrangements. See “Description of the Shares—Staking” and “Risk Factors—Risk Factors Related to Staking” for more information. Capitalized terms used but not defined in this subsection have the meanings given to such terms under “Glossary of Defined Terms.” Other than receiving and distributing cash from the Cash Account in connection with the creation and redemption of Baskets as described under “Description of Creation and Redemption of Shares,” the Trust will not hold cash, and will not engage a cash custodian. The Trust may from time to time be entitled to come into possession of rights incident to its ownership of SUI, which permit the Trust to acquire, or otherwise establish dominion and control over, other virtual currencies. These rights are generally expected to arise in connection with forks in the Blockchain, airdrops offered to holders of SUI or other similar events and arise without any action of the Trust or of the Sponsor or Trustee on behalf of the Trust. We refer to these rights as “Incidental Rights” and any such virtual currency acquired through Incidental Rights as “IR Virtual Currency.”
Incidental Rights and IR Virtual Currency
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With respect to any fork, airdrop or similar event, the Sponsor will cause the Trust to irrevocably abandon the Incidental Rights or IR Virtual Currency. In the event the Trust seeks to change this position, an application would need to be filed with the SEC by NYSE Arca seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency in-kind to an agent of the shareholders for resale by such agent. Because the Trust will abandon any Incidental Rights and IR Virtual Currency, the Trust would not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency. See “Business—Incidental Rights and IR Virtual Currency.” ................................................ Trust Expenses The Trust’s only ordinary recurring expense is expected to be the “Sponsor’s Fee.”
The Sponsor’s Fee will accrue daily in U.S. dollars at an annual rate of 0.35% of the NAV Fee Basis Amount of the Trust as of 4:00 p.m., New York time, on each day; provided that for a day that is not a business day, the calculation will be based on the NAV Fee Basis Amount from the most recent business day, reduced by the accrued and unpaid Sponsor’s Fee for such most recent business day and for each day after such most recent business day and prior to the relevant calculation date. This dollar amount for each daily accrual will then be converted into SUI by reference to the same Index Price used to determine such accrual. The Sponsor’s Fee is payable in SUI to the Sponsor daily in arrears. To cause the Trust to pay the Sponsor’s Fee, the Sponsor will instruct the Custodian to withdraw from the Trust’s Vault Balance (as defined below) the amount of SUI equal to the accrued but unpaid Sponsor’s Fee and transfer such SUI to the Sponsor’s account at such times as the Sponsor determines in its absolute discretion. The Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor’s Fee in its sole discretion. Presently, the Sponsor has agreed to waive the entire Sponsor Fee until the earlier of (x) a 3-month period commencing on the day the Shares are initially listed on the NYSE Arca or (y) the Trust reaching $1 billion in assets under management. There are no circumstances under which the Sponsor has determined it will definitely waive the fee. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver.
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