Risk Disclosures
Risk Disclosures
Date: 25 October 2025
Version: 1.0
Risk Disclosure Statement
1. Introduction
This Risk Disclosure Statement is provided by Nova Digital FZE (“Nova Digital”) to inform clients and prospective investors of the material risks associated with Virtual Assets and with investing in funds and investment vehicles managed by Nova Digital.
Nova Digital acts solely as a discretionary Investment Manager. Investors do not hold Virtual Assets directly and do not maintain Virtual Asset accounts with Nova Digital. Investors subscribe for and redeem shares or units in investment funds, which in turn invest in Virtual Assets in accordance with their investment mandates. All Virtual Assets are held at the fund level, in regulated custody, on regulated trading venues, or in the fund’s bank account where held in fiat.
This Risk Disclosure Statement does not constitute an exhaustive list of all risks. Virtual Assets are complex and high-risk instruments, and investors should carefully assess whether an investment in funds exposed to Virtual Assets is appropriate based on their financial position, objectives, experience, and risk tolerance. Independent professional advice should be sought where appropriate.
2. General Risks Associated with Virtual Assets
(a) Loss of Value and Extreme Volatility
Virtual Assets may lose part or all of their value and are subject to extreme price volatility. Prices may fluctuate rapidly and unpredictably due to market sentiment, technological developments, liquidity constraints, regulatory actions, or other factors. There is no assurance that any Virtual Asset will retain value over time.
(b) Transferability and Irreversibility
Virtual Assets may not always be transferable, and certain transfers may be irreversible once executed on a distributed ledger. Errors, fraud, or technical failures may result in permanent loss with limited or no recourse.
(c) Liquidity Risk
Markets for Virtual Assets vary significantly in liquidity. Some Virtual Assets may become illiquid, particularly during periods of market stress. In such circumstances, it may not be possible to liquidate positions at desired prices, or at all, which may adversely affect fund valuations and investor redemption timing.
(d) Transparency and Privacy
Many Virtual Asset transactions are recorded on public distributed ledger technologies (DLTs). While identities may not be explicitly disclosed, transaction data may be visible and capable of analysis by third parties, including regulators. Accordingly, transactions may not be private.
(e) Fraud, Manipulation, and Theft
Virtual Assets may be subject to fraud, manipulation, theft, hacking, and other targeted schemes. The decentralised and digital nature of Virtual Assets may increase exposure to such risks, and legal protections or recovery mechanisms may be limited or unavailable.
3. Technology and Operational Risks
Virtual Assets rely on complex and evolving technologies, including blockchain and cryptographic protocols. These technologies may be subject to software bugs, network failures, protocol changes (such as forks or upgrades), or malicious attacks. Such events may adversely impact the value, functionality, or availability of Virtual Assets held at the fund level.
4. Regulatory Risk
The regulatory treatment of Virtual Assets varies significantly across jurisdictions and remains subject to ongoing change. Regulatory actions, restrictions, or prohibitions, whether in the UAE or other jurisdictions, may adversely affect the valuation, transferability, custody, or trading of Virtual Assets and may impact fund operations.
Changes in regulation may occur with limited notice and may affect the ability of funds to continue certain investment strategies or exposures.
5. Market and Settlement Risks
Virtual Asset markets may be affected by speculative behaviour, market manipulation, technological disruptions, or operational failures at trading venues or counterparties. Settlement of Virtual Asset transactions may be delayed, disrupted, or fail, and transactions may not be capable of reversal once confirmed.
6. Counterparty and Custody Risk (Fund Level)
Although Nova Digital does not provide custody services, Virtual Assets held by funds may be exposed to counterparty risk, including the insolvency or operational failure of custodians, exchanges, or other service providers. While regulated and reputable providers are selected, such risks cannot be eliminated.
7. Investment Management Risk
Nova Digital exercises discretionary investment authority in accordance with the applicable investment mandate. Investment decisions may not perform as anticipated, and there can be no assurance that investment objectives will be achieved. Past performance is not a reliable indicator of future results.
8. Investor Structure and Liquidity Management
Investors hold shares or units in funds, not Virtual Assets. Subscriptions and redemptions are conducted in fiat currency. During periods of market stress, funds may apply liquidity management tools, including gates, deferrals, or suspension of redemptions, as disclosed in the fund’s prospectus. Such measures may delay an investor’s ability to redeem their investment.
9. No Guarantee and Non-Exhaustive Disclosure
The risks described above are not exhaustive. Additional risks may arise that are currently unknown or not anticipated. To the extent permitted by applicable law and contractual arrangements, Nova Digital does not accept responsibility for losses arising from investment in funds exposed to Virtual Assets.
10. Key Regulatory Risk Statement
Investors should note that Virtual Assets:
may lose their value in part or in full and are subject to extreme volatility;
may not always be transferable and some transfers may be irreversible;
may not be liquid;
may be recorded on public distributed ledgers and may not be private; and
may be subject to fraud, manipulation, theft, hacking, or other targeted schemes and may not benefit from legal protections.
Notice
This Risk Disclosure Statement should be read together with the relevant fund offering documents and valuation policies. Investors are encouraged to seek independent legal, tax, and financial advice before investing.
Date: 25 October 2025
Version: 1.0
Risk Disclosure Statement
1. Introduction
This Risk Disclosure Statement is provided by Nova Digital FZE (“Nova Digital”) to inform clients and prospective investors of the material risks associated with Virtual Assets and with investing in funds and investment vehicles managed by Nova Digital.
Nova Digital acts solely as a discretionary Investment Manager. Investors do not hold Virtual Assets directly and do not maintain Virtual Asset accounts with Nova Digital. Investors subscribe for and redeem shares or units in investment funds, which in turn invest in Virtual Assets in accordance with their investment mandates. All Virtual Assets are held at the fund level, in regulated custody, on regulated trading venues, or in the fund’s bank account where held in fiat.
This Risk Disclosure Statement does not constitute an exhaustive list of all risks. Virtual Assets are complex and high-risk instruments, and investors should carefully assess whether an investment in funds exposed to Virtual Assets is appropriate based on their financial position, objectives, experience, and risk tolerance. Independent professional advice should be sought where appropriate.
2. General Risks Associated with Virtual Assets
(a) Loss of Value and Extreme Volatility
Virtual Assets may lose part or all of their value and are subject to extreme price volatility. Prices may fluctuate rapidly and unpredictably due to market sentiment, technological developments, liquidity constraints, regulatory actions, or other factors. There is no assurance that any Virtual Asset will retain value over time.
(b) Transferability and Irreversibility
Virtual Assets may not always be transferable, and certain transfers may be irreversible once executed on a distributed ledger. Errors, fraud, or technical failures may result in permanent loss with limited or no recourse.
(c) Liquidity Risk
Markets for Virtual Assets vary significantly in liquidity. Some Virtual Assets may become illiquid, particularly during periods of market stress. In such circumstances, it may not be possible to liquidate positions at desired prices, or at all, which may adversely affect fund valuations and investor redemption timing.
(d) Transparency and Privacy
Many Virtual Asset transactions are recorded on public distributed ledger technologies (DLTs). While identities may not be explicitly disclosed, transaction data may be visible and capable of analysis by third parties, including regulators. Accordingly, transactions may not be private.
(e) Fraud, Manipulation, and Theft
Virtual Assets may be subject to fraud, manipulation, theft, hacking, and other targeted schemes. The decentralised and digital nature of Virtual Assets may increase exposure to such risks, and legal protections or recovery mechanisms may be limited or unavailable.
3. Technology and Operational Risks
Virtual Assets rely on complex and evolving technologies, including blockchain and cryptographic protocols. These technologies may be subject to software bugs, network failures, protocol changes (such as forks or upgrades), or malicious attacks. Such events may adversely impact the value, functionality, or availability of Virtual Assets held at the fund level.
4. Regulatory Risk
The regulatory treatment of Virtual Assets varies significantly across jurisdictions and remains subject to ongoing change. Regulatory actions, restrictions, or prohibitions, whether in the UAE or other jurisdictions, may adversely affect the valuation, transferability, custody, or trading of Virtual Assets and may impact fund operations.
Changes in regulation may occur with limited notice and may affect the ability of funds to continue certain investment strategies or exposures.
5. Market and Settlement Risks
Virtual Asset markets may be affected by speculative behaviour, market manipulation, technological disruptions, or operational failures at trading venues or counterparties. Settlement of Virtual Asset transactions may be delayed, disrupted, or fail, and transactions may not be capable of reversal once confirmed.
6. Counterparty and Custody Risk (Fund Level)
Although Nova Digital does not provide custody services, Virtual Assets held by funds may be exposed to counterparty risk, including the insolvency or operational failure of custodians, exchanges, or other service providers. While regulated and reputable providers are selected, such risks cannot be eliminated.
7. Investment Management Risk
Nova Digital exercises discretionary investment authority in accordance with the applicable investment mandate. Investment decisions may not perform as anticipated, and there can be no assurance that investment objectives will be achieved. Past performance is not a reliable indicator of future results.
8. Investor Structure and Liquidity Management
Investors hold shares or units in funds, not Virtual Assets. Subscriptions and redemptions are conducted in fiat currency. During periods of market stress, funds may apply liquidity management tools, including gates, deferrals, or suspension of redemptions, as disclosed in the fund’s prospectus. Such measures may delay an investor’s ability to redeem their investment.
9. No Guarantee and Non-Exhaustive Disclosure
The risks described above are not exhaustive. Additional risks may arise that are currently unknown or not anticipated. To the extent permitted by applicable law and contractual arrangements, Nova Digital does not accept responsibility for losses arising from investment in funds exposed to Virtual Assets.
10. Key Regulatory Risk Statement
Investors should note that Virtual Assets:
may lose their value in part or in full and are subject to extreme volatility;
may not always be transferable and some transfers may be irreversible;
may not be liquid;
may be recorded on public distributed ledgers and may not be private; and
may be subject to fraud, manipulation, theft, hacking, or other targeted schemes and may not benefit from legal protections.
Notice
This Risk Disclosure Statement should be read together with the relevant fund offering documents and valuation policies. Investors are encouraged to seek independent legal, tax, and financial advice before investing.