10-K: Bitwise Solana ETF Faces Early Losses Amidst SOL Price Drop

Bitwise Solana Staking ETF reported a significant net decrease in assets from operations and a 34.52% decline in NAV per share during its initial operating period, primarily due to a sharp depreciation in Solana's price.

Summary

• The Bitwise Solana Staking ETF (BSOL) commenced operations on October 23, 2025, and began trading on NYSE Arca on October 28, 2025.
• The Trust's primary objective is to provide exposure to Solana's value, less expenses, and a secondary objective is to derive additional Solana through staking.
• For the period from October 23, 2025, to December 31, 2025, the Trust reported a net decrease in net assets from operations of $206,543 thousand.
• This decrease was largely driven by a net change in unrealized depreciation on investment in Solana of $209,749 thousand, as the Solana price fell from $191.41 to $123.88 per SOL.
• The Trust generated $6,009 thousand in staking rewards during this period.
• The Sponsor Fee of 0.20% per annum was waived on the first $1 billion of Trust assets until January 27, 2026, resulting in $0 net Sponsor Fee for the period.
• Staking Expenses, equal to 6% of additional Solana generated, were also reimbursed by the Sponsor on the first $1 billion of Trust assets until January 27, 2026.
• As of December 31, 2025, the Trust held 5,154,309.1029 Solana with a total market value of $638,928 thousand.
• The Principal Market NAV per share decreased by 34.52% from $25.00 at commencement to $16.37 by December 31, 2025.
• The Trust sold 53,250,000 Shares for aggregate proceeds of $1,036,727,065 between October 28, 2025, and March 12, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a negative sentiment due to the significant depreciation in Solana's price and the resulting net losses for the Trust in its initial operating period, despite the benefits of fee waivers and staking rewards. The inherent volatility and regulatory uncertainties of digital assets remain substantial risks.

Positives

• The Trust successfully launched and began trading on NYSE Arca, providing investors with a regulated avenue for Solana exposure.
• Staking activities generated $6,009 thousand in rewards during the initial operating period, contributing to investment income.
• The Sponsor waived the entire 0.20% annual Sponsor Fee on the first $1 billion of Trust assets for a three-month period (until January 27, 2026), reducing initial costs for the Trust.
• The Sponsor also reimbursed all 6% Staking Expenses on the first $1 billion of Trust assets for the same three-month period.
• The Trust has implemented robust cybersecurity measures, including multi-layer cold storage, encrypted private keys, and whitelisting, overseen by a dedicated security team and third-party experts.
• Recent dismissals of SEC lawsuits against major digital asset trading platforms (Coinbase, Kraken, Binance) regarding Solana's security status may reduce regulatory uncertainty, although the overall status remains unsettled.

Negatives

• The Trust experienced a significant net decrease in net assets from operations of $206,543 thousand during its initial operating period (Oct 23 Dec 31, 2025).
• The price of Solana depreciated sharply from $191.41 on October 23, 2025, to $123.88 by December 31, 2025, leading to a net change in unrealized depreciation of $209,749 thousand.
• The Principal Market NAV per share declined by 34.52% in just over two months of operation.
• The Trust is a passive investment vehicle and does not employ hedging techniques to mitigate losses from price decreases, making it fully exposed to Solana's volatility.
• The Sponsor Fee waiver and Staking Expense reimbursement period ended on January 27, 2026, meaning these costs will now be borne by the Trust, further reducing NAV.
• The Trust's reliance on a single asset class (Solana) creates concentration risk, making it highly vulnerable to fluctuations in Solana's price.

Risks

• A determination that Solana is a security could adversely affect its price, the value of Shares, and potentially lead to the Trust's termination or extraordinary expenses.
• Extreme volatility in Solana's trading prices, including further declines, could cause Shares to lose all or substantially all of their value.
• Solana and the Solana network are subject to risks related to the digital asset ecosystem, including market sentiment, trading platform manipulation, adoption rates, competition, and negative publicity.
• The Solana network's Proof-of-History (PoH) mechanism is a new technology that may not function as intended, requiring specialized equipment or being vulnerable to flaws.
• Proof-of-stake blockchains, including Solana, are relatively new and have not been tested at scale over long periods, potentially having undetected vulnerabilities or structural flaws.
• Solana network faces significant scaling challenges, and efforts to increase transaction volume and speed may not be successful, leading to increased fees or reduced demand.
• The loss or destruction of a private key required to access Solana may be irreversible, leading to permanent loss of assets.
• New competing digital assets or methods of investing in Solana could reduce demand for Solana and negatively impact Share value.
• Congestion or delays in the Solana network could negatively impact the Trust's operations and the value of Solana.
• The Pricing Benchmark (CME CF Solana Dollar Reference Rate New York Variant) has a limited history and its methodology can be changed by the Benchmark Provider without considering the Trust's needs.
• The Pricing Benchmark may not accurately track the global Solana price, leading to discrepancies between Share price and NAV.
• Staking activities expose the Trust to risks such as loss of rewards, slashing penalties (social or future automatic), and operational uncertainties if Staking Agents fail.
• The Trust's staking could impair its ability to satisfy redemption orders on a timely basis due to cooldown periods (up to one epoch, typically two days, but potentially longer).
• Solana staking may result in adverse tax consequences for Shareholders, potentially incurring tax liability without an associated distribution from the Trust.
• The IRS may disagree with or challenge the Trust's treatment as a grantor trust, potentially leading to partnership or corporate taxation.
• The Trust is a passive investment vehicle and will not take actions to mitigate impacts of Solana price volatility.
• The value of Shares may be influenced by factors unrelated to Solana's price, such as operational problems, security vulnerabilities, or service provider terminations.
• Limited trading volume, lack of market makers, or legal restrictions could adversely affect the Trust's and Authorized Participants' ability to buy or sell Solana.
• The Shares may trade at a discount or premium to NAV due to non-concurrent trading hours between the Exchange and digital asset trading platforms.
• Security threats and cyber-attacks on the Trust or its service providers could result in loss of assets, operational halts, or reputational damage.
• The Sponsor and its management have limited history operating a Solana exchange-traded product, and their experience may be inadequate.
• The liability of the Sponsor and Trustee is limited, and the Trust may be required to indemnify them, reducing net assets.
• Solana held by the Trust is not subject to FDIC or SIPC protections, and the Solana Custodian's liability is limited, potentially leaving losses uncovered.
• The Prime Execution Agent's reliance on banking relationships and Connected Trading Venues poses risks of disruption or loss of assets if these entities fail.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust, particularly concerning resource allocation and affiliated service providers.
• The Trust is new, and if it is not profitable or fails to achieve sufficient scale, it may be terminated and liquidated at a disadvantageous time for Shareholders.
• Regulatory changes by U.S. or foreign governments could adversely affect Solana's price and the Trust's operations, including potential reclassification of Solana as a security.

Future Outlook

The Trust's future performance is subject to significant volatility in digital asset markets and evolving regulatory landscapes. The Sponsor anticipates continued staking activities to generate additional Solana, but acknowledges that actual events or results may differ materially from expectations due to general economic conditions, technology developments, changes in laws, and global political developments. The Sponsor is under no duty to update forward-looking statements.

Management Comments

• The Sponsor believes that the design of the Trust will enable certain investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use Solana by investing in the Shares rather than purchasing, holding and trading Solana directly.
• The Sponsor believes that the security procedures in place for the Trust, including, but not limited to, offline storage, or cold storage, multiple encrypted private key shards, and other measures, are reasonably designed to safeguard the Trust's Solana.

Industry Context

StockSavvy.ai notes that the launch of the Bitwise Solana Staking ETF reflects the growing institutional interest in digital assets beyond Bitcoin and Ethereum, particularly in smart contract platforms like Solana. The ETF's staking feature positions it to capture yield in a competitive market, a differentiator from simpler spot ETFs. The recent legislative efforts, such as the CLARITY Act and GENIUS Act, indicate a maturing regulatory environment in the U.S., which could provide more certainty for digital asset investment products. However, the significant price volatility experienced by Solana, as highlighted in the filing, underscores the inherent risks in this nascent asset class compared to traditional investments. The competition from over 17,000 other digital assets and established players like Bitcoin and Ethereum, along with the relatively smaller market capitalization and trading volume of Solana, suggests a challenging landscape for market share and sustained growth.

Comparison to Industry Standards

• Solana's market capitalization of $51.25 billion and 1-year average daily trading volume of $6 billion as of March 18, 2026, are significantly smaller than Bitcoin's ($1.42 trillion market cap, $45.4 billion daily volume) and Ether's ($263.53 billion market cap, $27 billion daily volume). This indicates lower liquidity and potentially higher volatility compared to the two largest digital assets, which also have exchange-traded products.
• The Trust's 0.20% Sponsor Fee (before waivers) is competitive within the digital asset ETF space, especially considering the added complexity of staking. For example, some Bitcoin ETFs have similar or slightly higher fees, while others might be lower.
• The use of CME CF Solana Dollar Reference Rate New York Variant for NAV calculation aligns with industry best practices for digital asset benchmarks, similar to those used for Bitcoin and Ethereum products, and is designed based on IOSCO Principles for Financial Benchmarks.
• The reliance on Coinbase Custody, a New York State limited liability trust company, for Solana custody is consistent with institutional-grade custody solutions employed by other major digital asset funds, offering robust security measures like cold storage and segregated accounts.

Management Changes

Corporate Governance

Legal Proceedings

• No current, past, pending, or, to the Sponsor's knowledge, threatened legal proceedings or administrative actions either by or against the Trust or the Sponsor that could have a material effect on the Trust's or the Sponsor's business, financial condition, or operations.
• SEC lawsuits against Binance, Coinbase, and Kraken, which initially alleged Solana was a security, were dismissed with prejudice in February, March, and May 2025, respectively. This reduces immediate regulatory pressure but the overall security status of Solana remains unsettled.
• The District Court for the Southern District of New York held in July 2023 that while XRP is not a security, certain sales of XRP to specific buyers amounted to investment contracts, indicating ongoing legal complexities in digital asset classification.
• The SEC's Division of Corporation Finance staff issued a statement in April 2025 indicating that the offer and sale of 'Covered Stablecoins' does not involve the offer and sale of securities, providing some clarity for a segment of the digital asset market.

Related Party Transactions

• The Sponsor (Bitwise Investment Advisers, LLC) is a wholly-owned subsidiary of Bitwise Asset Management, Inc. (BAM).
• Bitwise Investment Manager, LLC (BIM), an affiliate of the Sponsor, purchased the initial 100,000 Shares (Seed Baskets) of the Trust for $2,500,000.
• The Sponsor waived its 0.20% annual Sponsor Fee on the first $1 billion of Trust assets for a three-month period commencing October 28, 2025.
• The Sponsor reimbursed the Trust for all Staking Expenses (6% of additional Solana generated) incurred on the first $1 billion of Trust assets for a three-month period commencing October 28, 2025.
• The Sponsor may preference the use of Attestant, Ltd., an affiliate of the Sponsor, as a Staking Agent.
• Virtu Financial Singapore Pte Ltd., an approved Solana Trading Counterparty, is an affiliate of Virtu Americas LLC, an Authorized Participant to the Trust.
• Coinbase Custody Trust Company, LLC (Solana Custodian) and Coinbase, Inc. (Prime Execution Agent) are affiliates of Coinbase Global, Inc. Coinbase Credit, Inc. (Trade Credit Lender) is also an affiliate.

Stakeholder Impact

• Shareholders: Experienced a significant decline in investment value due to Solana price depreciation. Face ongoing risks from market volatility, regulatory uncertainty, and potential tax liabilities without distributions. Limited voting rights and reliance on Sponsor's discretion.
• Sponsor (Bitwise Investment Advisers, LLC): Manages the Trust and benefits from the Sponsor Fee (after initial waiver period). Assumes most normal operating expenses, but is indemnified against certain liabilities.
• Service Providers (e.g., Coinbase Custody, BNY Mellon): Receive fees for their services, but their liability to the Trust is limited, potentially leaving the Trust exposed to losses in certain scenarios.
• Solana Network Participants (validators, developers, users): The Trust's staking activities contribute to the network's security and functionality. However, the network's decentralized governance and potential for forks or attacks could impact its stability and adoption.

Next Steps

• The Sponsor Fee waiver and Staking Expense reimbursement period ended on January 27, 2026, meaning the Trust will now incur these costs.
• The Trust will continue to operate under its investment objectives, seeking exposure to Solana's value and deriving additional Solana through staking.
• The Sponsor will continue to monitor and evaluate the Trust's risk management processes and policies, including cybersecurity.
• The Trust will continue to comply with evolving federal, state, and foreign regulations concerning digital assets, including the implementation and interpretation of the CLARITY Act and GENIUS Act.

Key Dates

Recommendation

The Bitwise Solana Staking ETF presents a high-risk, high-reward investment in a volatile asset class. While the initial operating period showed significant depreciation in Solana's price and corresponding NAV decline, the Trust's structure with staking rewards and initial fee waivers offers some potential for long-term growth if Solana's value recovers. However, the inherent market volatility, regulatory uncertainties, and operational risks associated with digital assets, particularly a newer one like Solana, warrant caution. A 'hold' recommendation is appropriate for investors with a high-risk tolerance who are already exposed to Solana or believe in its long-term potential, but new investments should be approached with extreme prudence given the recent performance and ongoing risks. The ending of fee waivers will also increase the cost burden on the Trust going forward.

Keywords

Solana ETF, BSOL, Bitwise, Solana Staking, Crypto ETF, Digital Asset, SEC Filing, 10-K, Proof-of-Stake, Cryptocurrency, Investment Trust, NAV, Staking Rewards, Market Volatility, Regulatory Risk