S-1/A: Bitwise Solana Staking ETF: SEC Filing Details Launch

Bitwise Investment Advisers files an amended S-1 for its Solana Staking ETF, outlining its investment strategy, operational structure, and extensive risk factors for investors.

Summary

• The Bitwise Solana Staking ETF (BSOL) aims to provide exposure to Solana's value, less expenses, and generate additional Solana through staking.
• The Trust will hold Solana and value its Net Asset Value (NAV) using the CME CF Solana-Dollar Reference Rate New York Variant (Pricing Benchmark).
• Bitwise Investment Advisers, LLC sponsors and manages the Trust, which is structured as a Delaware statutory trust and is passively managed.
• A unitary management fee of 0.____% per annum of the Trust's Solana holdings will be paid to the Sponsor in Solana (percentage not yet disclosed).
• The Trust intends to stake approximately 100% of its Solana holdings, reserving some for redemptions and expenses, with staking rewards increasing net assets.
• Creation and redemption of shares (in blocks of 10,000 Shares, called Baskets) can be in-kind (Solana) or for cash.
• Coinbase Custody Trust Company, LLC serves as the Solana Custodian, responsible for secure safekeeping and maintaining segregated accounts, including staking accounts.
• Bitwise Asset Management, Inc., the parent of the Sponsor, purchased $200 in Seed Shares (8 shares at $25 each) on September 17, 2025.
• Bitwise Investment Manager, LLC, an affiliate, is expected to purchase initial Baskets for $2,500,000 (100,000 shares at $25 each) to acquire Solana.
• The Trust is an 'emerging growth company' but has opted out of the extended transition period for new accounting standards.

Sentiment

Score: 6

Explanation: The filing introduces a new product with potential benefits (Solana exposure, staking yield) but is heavily weighted with extensive and severe risk disclosures common for novel digital asset investments. The regulatory landscape is evolving, and the product itself is new, leading to inherent uncertainties. The blank fee percentages also add a layer of uncertainty. The positive aspects are balanced by the significant risks and the preliminary nature of the filing.

Positives

• Provides investors with an alternative, potentially cost-effective way to gain Solana exposure through a traditional brokerage account.
• The secondary objective to derive additional Solana through staking offers a mechanism to increase net assets.
• The Trust does not use derivatives, which reduces exposure to additional counterparty and credit risks.
• Coinbase Custody, a New York State limited liability trust company, provides regulated custody services for the Trust's Solana holdings.
• Coinbase Custody utilizes multi-layer cold storage security and segregated accounts for Trust holdings, enhancing asset protection.
• Coinbase Global, Inc., the parent of the custodian, maintains commercial crime insurance up to $320 million for client assets.
• The Trust has adopted liquidity policies and procedures to manage redemption risks associated with staking cooldown periods, aiming for T+2 settlement.
• Recent legislative efforts, including the CLARITY Act and GENIUS Act, indicate progress towards a comprehensive and clearer regulatory framework for digital assets in the U.S.

Negatives

• The unitary management fee percentage (0.____%) and staking expenses (______%) are not yet disclosed, creating uncertainty regarding costs.
• Staking rewards are subject to fees shared with Staking Agents and the Sponsor, which will reduce the net Solana generated for the Trust.
• The Trust is passively managed and will not employ hedging techniques to mitigate losses from Solana price decreases.
• The amount of Solana represented by a Share may decline over time if staking rewards do not sufficiently cover fees and expenses.
• Extraordinary, non-recurring expenses not assumed by the Sponsor will be paid through the sale of the Trust's Solana, which constitutes a taxable event for shareholders.
• The Sponsor, Trustee, and service providers have limited liability, potentially restricting recourse for shareholders in the event of losses.
• Coinbase Custody's and the Prime Execution Agent's liability is capped, and their insurance may not cover all potential losses.
• Assets held in the Trading Balance with the Prime Execution Agent are held on an omnibus basis, which increases the risk of loss in case of the agent's insolvency.
• Potential conflicts of interest exist due to the Sponsor and its affiliates managing other funds and potentially preferring affiliated staking agents.
• The Trust is a new fund and may not achieve sufficient scale, which could lead to its termination and liquidation at a disadvantageous time for shareholders.
• Shareholders have limited voting rights and no right to elect directors or receive dividends.
• The Trust is not registered under the Investment Company Act of 1940 or as a commodity pool, meaning shareholders do not have certain regulatory protections.
• The tax treatment of staking in a grantor trust is unsettled, and a contrary view by the IRS could lead to unexpected tax liabilities for shareholders.
• The Trust explicitly disclaims all Incidental Rights and IR Assets (e.g., forked assets, airdrops), meaning shareholders will not receive benefits from such events.

Risks

• A determination that Solana is a security may adversely affect its price and the value of Shares, potentially leading to the Trust's termination or extraordinary expenses.
• The trading prices of many digital assets, including Solana, have experienced extreme volatility (121.67% historical annualized volatility, 95.34% max annual decrease) and may continue to do so, leading to substantial loss of investment.
• The Trust is passively managed and will not take actions to mitigate losses from declines in Solana's price.
• Solana and the Solana Network are subject to risks related to the digital asset ecosystem, including market conditions, trading platform manipulation, adoption rates, and competition.
• Momentum pricing due to speculation regarding future appreciation in Solana's value could inflate prices and increase volatility.
• The Solana Network is a relatively new technological innovation (launched 2020) with a limited operating history, and its Proof-of-History (PoH) mechanism may not function as intended or may contain flaws.
• The Solana Network has suffered multiple network-level outage incidents, including significant disruptions lasting 6, 17, 8, 8.5, 19, and 5 hours between 2020 and 2024.
• Mathematical or technological advances, such as quantum computing, could undermine Solana's cryptographic consensus mechanism and compromise network security.
• Smart contracts on the Solana Network are new technology and may contain bugs or vulnerabilities, leading to losses (e.g., $320 million theft from Wormhole bridge in 2022).
• Concentrated ownership of Solana (top 100 wallets held ~91% as of June 2025) could lead to large sales or distributions adversely affecting market price.
• Competition from other blockchain networks (e.g., Ethereum, Polkadot, Avalanche, Cardano) and other digital assets could negatively impact Solana's demand and price.
• The loss or destruction of private keys required to access Solana may be irreversible, leading to permanent loss of assets.
• Solana transactions are generally irrevocable, meaning incorrectly transferred or stolen Solana may be irretrievable.
• Disruption of the internet may affect Solana Network operations, adversely impacting the Solana industry and the Trust.
• Decentralized governance of the Solana Network may make it difficult to implement solutions to challenges or lead to a lack of consensus, potentially causing users to abandon the network.
• The open-source nature of the Solana Network protocol means core developers are generally not directly compensated, potentially leading to inadequate resources for addressing emerging issues.
• A temporary or permanent fork or clone of the Solana Network could adversely affect the value of Shares, especially if the Sponsor's chosen network is not the most valuable fork.
• The Solana Network could be vulnerable to attacks on transaction finality and consensus processes (e.g., 33%, 50%, or >66% attacks) if a malicious actor gains control of staked Solana.
• Digital asset trading platforms on which Solana trades are relatively new, largely unregulated, and may be exposed to security breaches, fraud, and market manipulation (e.g., wash trading, front-running).
• The Pricing Benchmark has a limited history and could fail to accurately track the global Solana price, or experience system failures or errors.
• Staking may subject the Trust to risks, including potential future slashing penalties for validator misbehavior or downtime, and operational uncertainties.
• The Trust's staking activities could impair its ability to satisfy Redemption Orders on a timely basis due to cooldown periods, potentially leading to delays or trading at a premium/discount.
• The treatment of staking under U.S. federal securities laws may be unsettled, potentially leading to regulatory violations for the Trust or its service providers.
• Solana staking may result in adverse tax consequences for Shareholders, including 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 corporate taxation at the Trust level.
• The tax treatment of Solana and transactions involving Solana for U.S. federal income tax purposes may change, possibly with retroactive effect.
• The lack of active trading markets for the Shares may result in losses on investors' investments at the time of disposition.
• The Trust's Solana may be subject to loss, damage, theft, or restriction on access due to security threats and cyber-attacks.
• The Sponsor and its management have a limited history of operating an investment vehicle like the Trust, and their experience may be inadequate.
• Conducting creations and redemptions for cash has drawbacks, including potential slippage and reduced tax efficiency.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust, as the Sponsor may preference affiliated service providers.
• The Trust is dependent on Coinbase Custody and the Prime Execution Agent; their resignation, removal, or failure to provide services could adversely affect operations.
• Loss of a critical banking relationship for, or the failure of a bank used by, the Prime Execution Agent could adversely impact the Trust's ability to create or redeem Baskets or cause losses.
• Solana held by the Trust is not subject to FDIC or SIPC protections, and Coinbase Global's insurance may not be sufficient to cover all losses.
• Third parties may infringe upon or assert that the Sponsor has infringed their intellectual property rights, resulting in significant costs.
• The Trust faces risks related to the outbreak of infectious diseases or other public health issues, which could negatively impact holdings and disrupt operations.

Future Outlook

The Trust intends to issue Shares on a continuous basis for three years, unless extended. The Sponsor believes the Trust will provide a cost-efficient way for investors to implement strategic and tactical asset allocation strategies using Solana. The Solana Network is undergoing various software upgrades, including QUIC TPU, stake-weighted QoS, localized fee markets, sharding, and Firedancer, which are expected to increase transaction processing capabilities and scalability. The Sponsor anticipates engaging in staking with approximately 100% of the Trust's Solana holdings under normal circumstances.

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 certain factors have combined to improve the efficiency of the Solana market, creating a dynamic, institutional-quality, two-sided market.
• The Sponsor believes the Trusts is a straight-forward solution to seek its investment objectives.
• The Sponsor believes that the Pricing Benchmark is a representative value for the SOL-USD price of Solana, based on the methodology administered by the Benchmark Provider.
• 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 Trusts Solana.
• The Sponsor is continuing to monitor and evaluate the Trusts risk management processes and policies and believes that the current risk management processes and procedures are reasonably designed and effective.

Industry Context

The filing highlights Solana's position as the sixth-largest digital asset by market capitalization, competing with more established cryptocurrencies like Bitcoin and Ethereum, as well as other smart contract platforms such as Polkadot, Avalanche, and Cardano. It underscores the rapid evolution of the digital asset industry, referencing recent market volatility (e.g., FTX collapse) and increasing regulatory scrutiny. The document details new U.S. legislation, including the CLARITY Act and GENIUS Act, aimed at clarifying digital asset classification and stablecoin regulation, indicating a maturing but still uncertain regulatory environment. The Trust's use of a proof-of-stake consensus mechanism for staking aligns with a broader industry trend towards more energy-efficient blockchain protocols.

Comparison to Industry Standards

• Solana's market capitalization of $100,344,506,829 as of July 28, 2025, is significantly smaller than Bitcoin's ($2,338,806,283,252) and Ethereum's ($454,534,508,197), indicating a less mature and potentially more volatile market.
• Solana's average daily trading volume of $236,856,139 as of July 28, 2025, is considerably lower than Bitcoin's ($1,184,728,784) and Ethereum's ($468,361,514), suggesting lower liquidity compared to leading digital assets.
• Solana's historical annualized volatility of 121.67% and maximum annual price decrease of 95.34% demonstrate significantly higher price volatility compared to traditional financial assets and even more established digital assets.
• The proof-of-stake (PoS) consensus mechanism utilized by Solana is a newer innovation compared to Bitcoin's proof-of-work (PoW), with less long-term testing at scale, potentially exposing it to undetected vulnerabilities.
• The CME CF Solana-Dollar Reference Rate New York Variant, used for NAV calculation, is designed based on IOSCO Principles for Financial Benchmarks, aligning with international standards for financial benchmarks.
• Coinbase Custody, the Solana custodian, is chartered as a New York State limited liability trust company, providing a regulated custody solution, which is a higher standard than many unregulated digital asset custodians.

Corporate Governance

Legal Proceedings

• The SEC previously alleged Solana was a security in lawsuits against Binance, Coinbase, and Kraken, but these assertions were later removed or dismissed with prejudice in 2025.
• The SEC's Crypto Task Force was created on January 21, 2025, to develop a comprehensive and clear regulatory framework for digital assets.
• President Trump's Executive Order 'Strengthening American Leadership in Digital Financial Technology' (January 23, 2025) aimed to support the growth and use of digital assets and blockchain technology.
• The Digital Asset Market Clarity Act of 2025 (CLARITY Act) was passed by the House of Representatives, aiming to classify digital assets and delineate SEC/CFTC jurisdiction.
• The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) was signed into law in July 2025, establishing a federal regulatory framework for payment stablecoins.
• The Anti-CBDC Surveillance State Act prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional authorization.
• No material administrative, civil, or criminal actions have been brought against the Sponsor, the Trust, or any principal or affiliate of any of them within the past five years.

Related Party Transactions

• Bitwise Asset Management, Inc., the parent of the Sponsor, served as the Seed Capital Investor, purchasing $200 in Shares on September 17, 2025.
• Bitwise Investment Manager, LLC, an affiliate of the Sponsor, is expected to purchase initial Baskets for $2,500,000.
• Attestant, Ltd., an affiliate of the Sponsor, is anticipated to be selected as a Staking Agent, and the Sponsor may preference its use.
• Coinbase Custody Trust Company, LLC (Solana Custodian), Coinbase, Inc. (Prime Execution Agent), and Coinbase Credit, Inc. (Trade Credit Lender) are affiliates of Coinbase Global, Inc. and provide services to the Trust.

Stakeholder Impact

• **Shareholders**: Gain indirect exposure to Solana and potential staking rewards, but face high volatility, regulatory risks, limited voting rights, and potential tax liabilities without distributions. Their investment is not FDIC or SIPC insured.
• **Sponsor (Bitwise Investment Advisers, LLC)**: Manages the Trust, earns a Sponsor Fee, and potentially additional compensation from staking, while assuming certain operating expenses. Faces competition in the ETP market.
• **Service Providers (e.g., Coinbase Custody, BNY Mellon, Attestant Ltd.)**: Receive fees for their services, but operate under limited liability clauses. Their operational stability and security directly impact the Trust.
• **Regulators (SEC, CFTC, FinCEN)**: The filing is part of the ongoing process to comply with evolving digital asset regulations, reflecting increased scrutiny and legislative efforts to establish clear frameworks.
• **Solana Network Community**: The Trust's large holdings and staking activities could influence network dynamics, while network stability and development directly impact the Trust's asset value.

Next Steps

• The Trust's Shares are anticipated to be listed on Cboe BZX Exchange, Inc. under the ticker symbol BSOL.
• The registration statement needs to become effective, either through a further amendment or SEC determination.
• Bitwise Investment Manager, LLC is expected to purchase initial Baskets for $2,500,000.
• The Trust is expected to use proceeds from initial Baskets to purchase Solana at or prior to listing.
• The Sponsor will disclose the percentage of the Trust's Solana that is staked on its website daily.
• The Sponsor will determine and disclose the unitary management fee and staking expenses.
• Ongoing monitoring and evaluation of the Trust's risk management processes and policies by the Sponsor.
• Potential future software upgrades to the Solana Network, such as Firedancer, are in development.
• Further rulemaking by federal and state regulators, interagency coordination, and evolving enforcement approaches will impact the implementation and interpretation of new digital asset laws.

Key Dates

Recommendation

The Bitwise Solana Staking ETF presents an opportunity for investors to gain exposure to Solana and its staking yield through a regulated exchange-traded product. This offers a more accessible and potentially secure avenue compared to direct digital asset ownership. However, the filing extensively details numerous, significant risks inherent to digital assets, including extreme price volatility, evolving and uncertain regulatory landscape, potential network vulnerabilities, and operational dependencies on third-party service providers with limited liability. The product is new, lacks a performance history, and the fee structure for staking rewards is not fully disclosed. Therefore, a 'hold' recommendation is appropriate for investors to carefully assess these risks against the potential benefits, monitor the initial market performance, and await further clarity on the regulatory environment and operational execution. It is a speculative investment suitable only for those with a high-risk tolerance.

Keywords

Solana, SOL, ETF, Staking, Cryptocurrency, Digital Asset, Blockchain, Investment, SEC, Bitwise, Coinbase, Crypto, Exchange-Traded Product, Proof-of-Stake, PoS, Asset Management, Financial Product