This Digital Assets Risk Disclosure provides a description of certain risks associated with the Service and Digital Assets, but does not disclose or explain all the risks involved in the investment in digital assets and/or the use of the service. There may be additional risks that are not foreseen or identified in the Specific Terms or in this Digital Assets Risk Disclosure, including without limitation by the Commission de Surveillance du Secteur Financier, the European Securities and Markets Authority (ESMA), and the European Banking Authority (EBA), as per below:

- ESMA, EBA and EIOPA warning to consumers on the risks of Virtual Currencies¹
- EBA warning on virtual currencies²
- CSSF warning regarding virtual currencies³
- CSSF guidance for consumers in the context of virtual assets⁴

The Bank strongly recommends that the Client seeks professional advice before taking investment decisions.

¹ _{EU financial regulators warn consumers on the risks of crypto-assets (europa.eu)}
² _{Crypto-assets: ESAs remind consumers about risks | European Banking Authority (europa.eu)}
³ _{CSSF warning regarding virtual currencies}
⁴ _{CSSF guidance for consumers in the context of virtual assets} 

1.1 All risk disclosures and similar disclaimers set out in the Offer Documents are incorporated herein by reference.

1.2 Capitalized terms used in this Digital Assets Risk Disclosure and not otherwise defined shall have the meaning ascribed to them in the Specific Terms or in the General Terms and Conditions.

2.1 Digital Assets may incorporate a large number of financial and non-financial rights, claims and/or assets, including rights and obligations not usually found in (traditional) financial markets instruments such as equity and fixed income securities. Investors wishing to acquire Digital Assets must carefully review the rights and obligations incorporated in the Digital Assets before taking any investment decisions.

2.2 Digital Assets may, for example, grant their holders the right to request the performance of services (e.g., access to a platform), or serve as means of payment. The fair value of Digital Assets may consequently be extremely difficult to assess and may ultimately prove to be much lower than anticipated. This may in particular be the case for Digital Assets that incorporate a right to the supply of goods or performance of services, as many investors in such Digital Assets will have little need for such goods or services but only acquire the Digital Assets with the expectation that they will be able to sell the Digital Assets back at a profit.

2.3 The value of the Digital Assets is understood to derive primarily from the rights incorporated therein. Because the Client may not be able to exercise such rights, the Client may potentially derive very little benefits from the Digital Assets as long as the Client holds such Digital Assets through the Bank. The Client may, in particular, be unable to seize opportunities, e.g., to redeem the Digital Assets and/or to pay for products and/or services offered by the issuer or third parties.

2.4 In addition, the technical functionalities of a Digital Asset (e.g., the ability to transfer them, to create new Digital Assets, the number of decimals up to which a Digital Asset may be traded, etc.) depend on the smart contract for the relevant Digital Asset. Smart contracts are non-trivial pieces of computer code and their interactions with the relevant Distributed Ledger network are complex. Investors should review and ensure that they understand the functioning of the relevant smart contracts before they invest in a particular Digital Asset.

2.5 There is no guarantee that smart contracts, or even the Distributed Ledger network on which they operate, are bug-free and will function according to the Digital Asset issuer's or the investors' expectations. Furthermore, a Digital Asset issuer may retain the possibility to amend the code of the smart contract at any time. Depending on the rights and obligations incorporated therein, issuers have considerable discretion to manage their Digital Assets and may decide to cancel the Digital Assets and replace such Digital Assets with other forms of evidence or with paper certificates, for example. The Bank is under no obligation to provide custody services for any Digital Asset, paper certificate or other replacement for the Digital Assets.

3.1 The Digital Assets may not be listed on a securities exchange, and their issuer may consequently not be subject to the regime that applies to listed companies. Issuers of Digital Assets may not be subject to a number of important rules designed to protect investors. In particular, issuers may not be subject to the obligation to:
- publish their financial statements in accordance with a recognized accounting standard;
- publish quarterly or half-yearly financial statements;
- inform the public as soon as events susceptible of affecting the price of the Digital Assets occur; and
- disclose transactions by company insiders (e.g., senior management of the issuer).

3.2 Because they may not be listed or admitted to trading on a regulated exchange, multilateral or organized trading facility, the Digital Assets may not be subject to insider trading and market manipulation regulations. Accordingly, the market for the Digital Assets (to the extent one such market develops for the Digital Assets) may be more prone to fraud or insider trading. Due to the lack of regulation regarding transparency of costs and the price formation process, there is a risk of price manipulation. As a consequence, in the absence of such rules and failing oversight of the price formation process, a fair and equitable treatment of information provided to the different participants may not be guaranteed and investors risk not being able to exchange Digital Assets at a fair price.

3.3 The information provided to investors, e.g., in Offer Documents and related sources, may be incomplete or difficult to understand, and may not reflect all the risks associated with the Digital Assets.

4.1. Each Distributed Ledger has its own rules and protocols regarding how transactions and operations are validated. These rules and protocols may include mechanisms described as "staking" or similar wording. Although such mechanisms tend to involve users of a Distributed Ledger participating in the validation of transactions by evidencing their stake in the cryptocurrency of the Distributed Ledger, there is no uniform concept of "staking". Depending on the Distributed Ledger, participation in validation mechanisms may involve locking the relevant Digital Assets for a minimum period of time and/or transferring those Digital Assets to a specific Smart Contract. The Bank does not provide advice on validation mechanisms of Distributed Ledgers and has not verified that such mechanisms are safe or function properly. The Client bears the risk that these mechanisms will be compromised or will not function properly. It is the Client's responsibility to understand and perform the verifications the Client deems necessary or appropriate on the validation mechanisms of Distributed Ledgers.

4.2. When the Client instructs the Bank to Stake certain Digital Assets with a specific Sub-custodian, the Bank will, on that basis, instruct – in its name, but for the account and at the sole risk of the Client – the relevant Sub-custodian to do what the Sub-custodian considers necessary to Stake the Digital Assets of the Client. The Bank will only act as an intermediary and will not control how the Sub-custodian is utilizing the relevant Digital Assets, including whether these Digital Assets are actually participating in validation mechanisms, or whether the Digital Assets have been transferred to third parties, locked, included in a pool or Smart Contract or otherwise disposed of. The Client is  responsible for doing his own due diligence on any Sub-custodian and such Sub-custodian's staking services that the Client instructs the Bank to use.

4.3. The Client acknowledges that certain Staked Digital Assets may be subject to such lock-up periods and similar restrictions that delay their Unstaking. While some of these restrictions will stem from Distributed Ledgers themselves, the Bank or the relevant Sub-custodian, as the case may be, may impose its own delays and restrictions. As a result, if a Distributed Ledger claims that Unstaking takes no longer than e.g., 48 hours, the time it takes for the Client's Digital Assets in custody with the Bank or the relevant Sub-custodian, as the case may be, to be Unstaked may be longer. Any Unstaking deadlines referred to on the Bank's website are purely indicative and the Bank does not undertake to procure that all Digital Assets will be Unstaked within the indicated timeframe. As long as the Bank is processing an Unstaking request, the Client will not be in a position to sell or Transfer the relevant Digital Assets.

4.4. The Client bears the risk that the Bank or the relevant Sub-custodian, as the case may be (and their respective delegates or sub-contractors), will be unable to Unstake or otherwise return Digital Assets that have been Staked. In this respect, the Client bears the risk that Digital Assets that the Client decided to Stake will be lost or compromised, including due to hacking, theft, fraud, cyber-attack or malfunction of a Smart Contract. Staked Digital Assets may, in certain circumstances and on certain Distributed Ledgers, be subject to so-called "slashing" penalties, which may result in the Digital Assets being destroyed or "burned". These penalties may for example be imposed if they are used to validate transactions and other operations in a way that breaches the rules and protocols of the relevant Distributed Ledger. The Client bears the risk that such penalties will be imposed. 

4.5. The Bank provides services in relation to Staking on an "as is" basis. There is no guarantee that the Client will receive any Reward in respect of Staked Digital Assets. Rewards depend on a number of factors beyond the Bank's control and regarding which the Bank makes no representation. There may for example be a (possibly significant) delay between the moment the Client submits an instruction to Stake Digital Assets and the moment these Digital Assets are actually participating in the validation mechanisms of the relevant Distributed Ledger. Further, Rewards may be influenced by the amount of Digital Assets Staked with a particular validator (or equivalent functions in a given Distributed Ledger), the time of Staking, and a number of other factors. The Client therefore acknowledges that, by Staking his Digital Assets, the Client (a) relinquishes any control over such Digital Assets for a possibly extended period of time, and (b) bears the risk that the Bank or the relevant Sub-custodian, as the case may be, will be unable to Unstake or otherwise return Digital Assets, without any assurance that any Reward will be available and ultimately effectively transferred to the Bank for the account of the Client.

4.6. The tax treatment of Staking and of Rewards may be subject to uncertainties in a number of jurisdictions. The Client is solely responsible for assessing the tax consequences of Staked Digital Assets and Rewards and for complying with applicable tax laws and practice. The Client acknowledges that the treatment of Staked Digital Assets and of Rewards in case of bankruptcy of the Bank, the relevant Sub-custodian or any other involved party in accordance with the Contract may be subject to uncertainties in many jurisdictions, including Switzerland and Luxembourg.

5.1 When consenting to lend Digital Assets, the Client bears the risk that borrowers will be unable to return Digital Assets that have been lent. In this respect, the Client bears the risk that Digital Assets that the Client decided to lend will be lost or compromised, including due to actions of the borrowers. The Client should expect borrowers to provide their services on an “as is” basis and to have disclaimed any liability in case they are unable to return Digital Assets to the Client. As a result, if a borrower is for example unable to return the Client’s Digital Assets, the Bank may not have any valid claim for the return of such Digital Assets (and may therefore be unable to assign this claim to the Client). In the event the Client requires the return of lent Digital Assets, such return will require a minimum delay of 12 hours. An allocation method is used to assign which Client will be borrowed from in every transaction. From a legal standpoint, the Client transfers the legal title to the Digital Assets during the lending period, yet the Client acquires a legal claim on the collateral held by the Bank for the Client. The Bank ensures that there is sufficient collateral of a certain quality. The collateral is usually liquid and readily marketable; common forms of collateral are cash or financial instruments. The collateral is adjusted daily to ensure there is at least 100% of the value of the lent Digital Assets. In the unlikely event of the Bank’s insolvency or other cases in which the Bank or the ultimate borrower is unable to return the Digital Assets, the Client can claim the collateral held in the name and for the account of the Bank.

5.2 For the duration of the lending period, the Client may not be able to exercise rights of ownership or receive other forms of compensation, e.g., airdrops, on the lent Digital Assets.

5.3 Aside from whether the Digital Assets are lent or not, the Client is always exposed to price risk on the Digital Assets. The price of Digital Assets can be extremely volatile and unpredictable and, combined with inherent difficulties of valuing Digital Assets reliably, can result in significant losses in a short time. This risk continues to exist where those Digital Assets are lent.

5.4 In the event of the default by or liquidation of a counterparty in a Digital Assets lending transaction, a number of risks may arise. These include (i) the value of the collateral may be negatively correlated with the value of the lent Digital Assets post the event of a default by a borrower. In such an event the value of the collateral may be less than the value required to regain the full value of the lent Digital assets. (ii) the liquidity of the collateral may not be sufficient to allow the Bank to regain the full value of the lent Digital Assets.

5.5 The Bank will not make any assessment on the appropriateness or suitability of Digital Assets lending for the Client.

6.1 The value of Digital Assets may change significantly (even on an intraday basis) and movements on the price of the Digital Assets may be unpredictable.

6.2 While the volatility of the value of Digital Assets is (perceived as) high, changes and advances in technology, fraud, theft and cyber-attacks and regulatory changes, among others, may increase volatility further – elevating the potential for investment gains and losses. In addition, Digital Assets lack the historical track record of other financial instruments, currencies or commodities such as gold that could guide if current levels of volatility are typical or atypical. In any event, past performance is no indication or guarantee of future performance.

6.3 Investments in Digital Assets and in cryptocurrencies are deemed highly speculative investments. Digital Assets and cryptocurrencies are subject to high volatility, i.e., the price of Digital Assets or of cryptocurrencies may rapidly go down as well as up, on any given day. The movements of the Digital Assets and of cryptocurrencies are unforeseeable. The Client acknowledges that Digital Assets and cryptocurrencies are not supervised by authorities or institutions such as central banks and that, therefore, there is no authority or institution which may intervene to stabilize the value of Digital Assets or cryptocurrencies and/or prevent or mitigate irrational price developments. In addition, Digital Assets and cryptocurrencies are generally not backed by any currencies issued by a government, or any physical commodities or any precious metals, and their value is therefore based principally on the trust that owners and users place in Digital Assets and cryptocurrencies. The risk of substantial or total loss in purchasing or selling Digital Assets exists. The Client acknowledges and agrees that they shall access and use the Service at their own risk.

6.4 Investments in Digital Assets and in cryptocurrencies are susceptible to irrational bubbles or loss of confidence, which could collapse demand relative to supply, e.g., because of unexpected changes imposed by the software developers or others, a government crackdown, the creation of superior competing alternative currencies, or a deflationary or inflationary spiral. Confidence might also collapse because of technical problems, for instance if significant amounts of Digital Assets are lost or stolen or if hackers or governments are able to prevent any transactions from settling.

6.5 The market for the relevant Digital Assets may experience periods of decreased liquidity or even periods of illiquidity. The prices made available by the Bank via the System for the Client to purchase or sell Digital Assets are based on feeds provided by one or several Liquidity Providers. One single Liquidity Provider may be the sole source of liquidity for the trading of Digital Assets via the System, creating a higher illiquidity risk. In the event that the Bank is unable to trade the Digital Assets at a certain time or permanently (if the Bank has not found a suitable market, trading platform or counterparty to trade Digital Assets), the Client will not be able to purchase or sell Digital Assets. Furthermore, a lower liquidity may result in very rapid and hectic price movements, in wider spreads and/or in higher rejection rates. Under certain market conditions, the Client may find it difficult or impossible to liquidate a position. This can occur, for example, if there is insufficient liquidity in the market and the Bank is consequently not able to (a) provide prices for the Client to purchase or sell Digital Assets and/or (b) execute any orders or Transactions. The Client’s ability to purchase or sell Digital Assets as well as to compare the prices of Digital Assets may consequently be limited.

7.1 Digital Assets are instruments that rely on the Distributed Ledger technology to be recorded and transferred. The acquisition of Digital Assets, as well as their transfer on a Distributed Ledger may be subject to fees payable in cryptocurrencies. Digital Assets are therefore usually in a relationship of interdependence with cryptocurrencies.

7.2 The Distributed Ledger technology, on which the functioning of the Digital Assets and cryptocurrencies is based, is still at an early stage and best practices are still to be determined and implemented. The Distributed Ledger technology is likely to undergo significant changes in the future. Technological advances in cryptography, code breaking or quantum computing, etc., may pose a risk to the security of Digital Assets and cryptocurrencies. In addition, alternative technologies to certain cryptocurrencies could be established, making the relevant cryptocurrency less relevant or obsolete. If the Digital Assets are traded on a Distributed Ledger that becomes less relevant or obsolete, this could negatively affect the price and the liquidity of the Digital Assets.

7.3 The functioning of the Digital Assets and of cryptocurrencies relies on open-source software. Developers of such open-source software are not employed or controlled by the Bank or the Sub-custodians. Developers may introduce weaknesses and programming errors into the open-source software or may stop developing the open-source software (potentially at a critical stage where a security update is required), keeping Digital Assets or cryptocurrencies exposed to weaknesses, programming errors and threats of fraud, theft and cyber-attacks.

7.4 Distributed Ledger networks have experienced a surge in the number of transactions over the last few years. An increasing number of transactions coupled with the inability to implement changes to Distributed Ledger technology may result in a slower processing time of Transactions (potentially days to verify a Digital Asset transaction) and/or a substantial increase in the transaction fees paid to so called "miners" or "validators" of cryptocurrencies for facilitating the processing of Digital Asset transactions. This may limit the Bank's ability to process Transactions and lead to an increase of the fees.

7.5 Since there is no central body (e.g., a central bank or a government agency) overseeing the development of the Distributed Ledger technology, the functioning of Distributed Ledgers, as well as further improvements of such functioning (e.g., ability to increase number of transactions, reduce processing time, reduce transaction fees, implement security updates), relies on the collaboration and consensus of various stakeholders, among others, developers enhancing the open-source software related to cryptocurrencies or so called "miners" facilitating the processing of transactions. Any disagreement among stakeholders may result in a Hard Fork. Hard Forks may lead to the instability of a specific version of a relevant Distributed Ledger. In addition, Hard Forks or the threat of a potential Hard Fork may prevent the establishment of Digital Assets as a viable alternative to the way assets are traditionally traded. Hard Forks or the potential of a Hard Fork may limit the Bank's ability to process Transactions and lead to an increase in fees.

7.6 The particular characteristics of Digital Assets (e.g., they only exist virtually on a computer network, transactions in Digital Assets are usually not reversible and are done largely anonymously) make it an attractive target for fraud, theft and cyber-attacks. Various tactics have been developed (or weaknesses identified) to steal Digital Assets or disrupt the underlying Distributed Ledger technology, including e.g., the "51% attack" where persons with malicious intents may take control over a relevant Distributed Ledger network by providing 51% of the computer power in the relevant Distributed Ledger network, or the "denial of service attack" where persons with malicious intent attempt to make the relevant Distributed Ledger network's resources unavailable by overwhelming it with service requests. The Client is directly exposed to fraud, theft and cyber-attacks for the following reasons: (i) any high profile losses as a result of such events (e.g., bankruptcy of the then largest bitcoin exchange Mt. Gox in February 2014) may raise scepticism over the long-term future of Digital Assets and may prevent the establishment of Digital Assets as an accepted way to represent assets, and may increase the volatility and illiquidity of the relevant Digital Assets; (ii) any loss resulting from a Loss Event shall be borne exclusively by the Client.

7.7 Digital Assets and cryptocurrencies only exist virtually on a computer network and have no physical equivalent. Establishing a value for Digital Assets is difficult as the value depends on the expectation and trust that cryptocurrencies can be used for future payment transactions and as a medium of exchange. Among others, persistent high volatility, changes and advances in technology, fraud, theft and cyber-attacks and regulatory changes may prevent the establishment of cryptocurrencies as an accepted long-term medium of exchange potentially rendering cryptocurrencies worthless. Due to the relationship of interdependence between the Digital Assets and cryptocurrencies, this could affect the price and liquidity of the Digital Assets.

7.8 The technologies underlying Digital Assets and the services relating to the creation, storage and transfer of Digital Assets are particularly innovative but recent so that they may be vulnerable. As a consequence, they may expose users to lasting or temporary system disruptions, hacking attempts, problems relating to activity peaks, etc. While the market for Digital Assets may be deemed open during the Availability Period, during periods of disruption, holders of Digital Assets may not able to carry out transactions at the desired moment and may thus suffer considerable losses due to the fluctuations in value during such periods. For these reasons, the Bank declines any responsibility if the System no longer permits Clients to execute such transactions, in particular, outside the Bank’s normal business hours.

8.1 Digital Assets have been in existence for only a few years and various regulatory bodies have or are in the process of forming a view on required legal or regulatory actions relating to Digital Assets (e.g., regulations concerning KYC, anti-money laundering and counter terrorist financing, taxation, consumer protection, reporting, publicity requirements or capital controls, as well as the civil law characterization of Digital Assets). Any forthcoming legal or regulatory actions may result in the illegality of Digital Assets or the implementation of controls relating to Transactions in (and therefore liquidity of) some or all of the Digital Assets. In addition, control mechanisms may increase Digital Assets' transaction costs significantly. By using the Service and trading Digital Assets, the Client bears the risk related to the uncertainty as to the legal, regulatory and tax treatment of Digital Assets and/or Transactions. Clients should be aware that holding Digital Assets may have tax implications, such as value added tax or capital gains tax, and should consider whether tax liabilities apply in their country when using Digital Assets.

8.2 The treatment of Digital Assets in a bankruptcy or similar event has not been conclusively determined and there are no court precedents or published practice of regulatory authorities and bankruptcy administrations with respect to Digital Assets, so that the position is likely to evolve in the future. Whether Digital Assets held in custody by the Bank (whether directly or through Sub-custodians) for the account of the Client can be considered as "deposited assets" and, hence, be segregated in the event of bankruptcy of the Bank, depends on a number of factors. Regulatory practice, court decisions, accounting rules and standards, as well as the features of Digital Assets and the manner in which custody by the Bank or by a Sub-custodian is operated may influence the treatment of Digital Assets in a bankruptcy or similar event. Although the Bank expects that most if not all Digital Assets for which it provides custody services should be segregated in the event of a bankruptcy of the Bank, there is no guarantee that this will indeed be the case. Investors who acquire and hold Digital Assets through the Bank accept the risks resulting from any bankruptcy or insolvency event affecting the Bank and/or any Sub-custodian, depending on the type of Digital Assets involved and the evolving legal and regulatory practice related to the treatment of Digital Assets. Ultimately, the Client may not benefit from investment guarantee schemes, and in such a case the Client risks losing their entire investment.

9.1 Investors should be aware that any purchase and sale of Digital Assets may be recorded in a public Distributed Ledger and may therefore be visible to the public.

9.2 Distributed Ledgers on which Digital Assets are issued and/or recorded is neither the property of, nor under any control of the Bank or the Sub-custodians. Information available on the respective Distributed Ledgers may be processed, exploited or misused by third parties, including in unforeseen ways.