10-K: Invesco Galaxy Solana ETF Reports Initial Operating Period Loss

The Invesco Galaxy Solana ETF (QSOL) reported a net loss of $0.2 million for its initial operating period ending December 31, 2025, primarily due to unrealized losses on Solana investments.

Summary

• The Invesco Galaxy Solana ETF (QSOL) is a Delaware statutory trust formed on June 12, 2025, which commenced trading on the Cboe BZX Exchange on December 15, 2025.
• Its investment objective is to reflect the performance of the spot price of Solana (SOL) as measured by the Lukka Prime Solana Reference Rate, adjusted for staking rewards and expenses.
• The Trust aims to stake substantially all of its SOL to earn staking rewards, expecting to outperform the Benchmark before accounting for its expenses and liabilities.
• For the period from October 16, 2025, to December 31, 2025, the Trust reported a net loss of $(0.2) million, primarily due to a net change in unrealized loss on Solana investments of $(244,798).
• Total assets as of December 31, 2025, were $2,242,224, with 18,013 SOL held at a fair value of $2,241,724.
• The net asset value per share was $12.45, and the market value per share was $12.41 as of December 31, 2025.
• The Sponsor Fee is 0.25% per annum of the daily total net assets, with other ordinary expenses covered by the Sponsor.
• The Solana network experienced several high-profile network outages and technical issues, including in September 2021, 2022 (FTX collapse), February 2023 (19-hour outage), and February 2024 (5-hour outage).
• On December 31, 2025, the Solana network handled approximately 2,693 transactions per second, with a 30-day average transaction fee of $0.0028 (0.00058 SOL).

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative initial report, marked by significant unrealized losses on Solana holdings and a challenging market environment for the underlying asset, despite the strategic advantage of staking rewards.

Positives

• The Trust expects to outperform its Benchmark (Lukka Prime Solana Reference Rate) before expenses due to its plans to receive SOL staking rewards.
• The Sponsor covers all routine operational, administrative, and ordinary expenses, including Trustee, Administrator, Transfer Agent, Solana Custodian, and Execution Agent fees, as well as Exchange listing, SEC registration, printing, mailing, legal, and audit fees.
• The Sponsor's payment of Trust expenses is not subject to a cap.
• The Trust earned $1,445 in net staking income for the period from October 16, 2025, to December 31, 2025.
• Invesco Ltd. (Sponsor's parent) purchased initial seed shares for $100,000 and later created 175,000 shares, demonstrating initial capital commitment.
• The Sponsor has a robust cybersecurity program led by a Global Chief Security Officer with over 29 years of experience, including proactive assessments, third-party due diligence, incident response, and mandatory employee training.

Negatives

• The Trust reported a net loss of $(0.2) million for its initial operating period (October 16, 2025, to December 31, 2025).
• A significant net change in unrealized loss on investments in Solana of $(244,798) contributed to the net loss.
• Solana's price moved lower over the period ended December 31, 2025, driven by internal ecosystem failures (smart contract/protocol vulnerabilities, governance failures in DeFi protocols like Jupiter Lend, Kamino, Jito), declining user engagement, liquidity rotation to rival chains, collapse of the memecoin sector, and persistent macroeconomic headwinds.
• The net asset value per share declined from $13.84 at the beginning of the period (December 10, 2025) to $12.45 at the end of the period (December 31, 2025).
• The total return at net asset value from October 16, 2025, to December 31, 2025, was (50.20)%.
• The total return at market value from December 15, 2025, to December 31, 2025, was (0.80)%.

Risks

• **Market and Volatility Risk**: SOL has historically exhibited high price volatility, with potential for rapid declines, including to zero, and the market may experience pricing bubbles.
• **Adoption Risk**: The further development and acceptance of the Solana network are uncertain, and slowing, stopping, or reversing adoption could adversely affect SOL price and investment in Shares.
• **Regulatory Risk**: Regulatory changes or actions (e.g., restrictions on SOL use, classification as a security) could materially adversely affect the nature of an investment in Shares.
• **Cybersecurity Risk**: Flaws in Solana's source code or underlying cryptography, or attacks on entities that custody or facilitate SOL transfers/trading, could lead to theft of SOL and loss of public confidence.
• **Expense Risk**: The Trust's returns will not match the performance of SOL because the Trust incurs the Sponsor Fee and may incur other expenses.
• **Discount/Premium to NAV Risk**: The market price of Shares may reflect a discount or premium to NAV due to price volatility, trading activity, differences in trading hours, and supply/demand imbalances.
• **Cash Creations and Redemptions Risk**: The use of cash creations and redemptions may adversely affect arbitrage transactions intended to keep the Share price linked to SOL, potentially causing divergence from NAV.
• **Scaling Challenges**: The Solana network faces significant scaling challenges, and efforts to increase transaction volume and speed may not be successful, potentially leading to higher fees or slower transaction settlement times.
• **Network Outages**: The Solana network has suffered several high-profile network outages and technical issues, which triggered sharp price swings and could recur.
• **Concentration of Ownership**: SOL exhibits a high degree of concentration in ownership, increasing its susceptibility to large-scale sell-offs.
• **Influence of Individuals/Companies**: The price of SOL may be impacted by the behavior and statements of a small number of influential individuals or companies.
• **Competition from CBDCs and Other Digital Assets**: Central bank digital currencies (CBDCs) and other competing digital assets could adversely affect the value of SOL.
• **Stablecoin Impact**: Prices of SOL may be affected by stablecoins (e.g., Tether, USDC), the activities of stablecoin issuers, and their regulatory treatment, potentially leading to market volatility.
• **Open-Source Protocol Risk**: The open-source structure of the Solana network means core developers may not be directly compensated, potentially leading to a failure to properly monitor and upgrade the protocol.
• **Governance Clarity**: Lack of clarity in the corporate governance of SOL may lead to ineffective decision-making that slows development or prevents the Solana network from overcoming important obstacles.
• **Smart Contract Vulnerabilities**: Smart contracts are new and their ongoing development and operation may result in problems, errors, or hacks, which could reduce demand for SOL.
• **Irrevocable Transactions**: SOL transactions are irrevocable, and stolen or incorrectly transferred SOL may be irretrievable, adversely affecting an investment in the Trust.
• **Custody Risk**: If the Solana Custodian's internal procedures are inadequate or private keys are lost/compromised, the Trust could lose access to or suffer theft of its SOL holdings.
• **Service Provider Insolvency**: The Prime Broker or Solana Custodian could become insolvent, potentially leading to a loss of or delay in access to Trust assets, with the Trust being treated as an unsecured creditor.
• **Banking Relationship Loss**: Loss of a critical banking relationship for, or the failure of a bank used by, the Execution Agent could adversely impact the Trust's ability to create or redeem Creation Baskets or cause losses.
• **Connected Trading Venue Failure**: The loss or failure of any Connected Trading Venues utilized by the Prime Broker may adversely affect the Execution Agent's ability to execute SOL transactions and cause losses for the Trust.
• **Internet Disruption**: Solana is dependent upon the internet; a significant disruption could affect the network's operations and SOL price.
• **Regulatory Uncertainty (Foreign Jurisdictions)**: SOL faces an uncertain regulatory landscape in many foreign jurisdictions, which may negatively impact its acceptance and value.
• **Money Service Business Regulation**: If the Trust or its service providers are deemed money service businesses or money transmitters, additional regulation and expenses could arise, potentially leading to dissolution.
• **Tax Treatment Uncertainty**: The U.S. federal income tax treatment of SOL, SOL staking, and transactions involving SOL is uncertain and may change, potentially with retroactive effect.
• **Hard Fork/Airdrop Tax Liability**: Shareholders may incur a federal income tax liability as a result of a hard fork, airdrop, or similar event, even if the Trust disclaims the assets.
• **UBTI for Tax-Exempt Shareholders**: U.S. Tax-Exempt Shareholders may recognize unrelated business taxable income (UBTI) as a consequence of an investment in the Shares due to staking rewards.
• **Intellectual Property Claims**: Third parties may assert intellectual property claims relating to SOL, potentially affecting network operation or forcing liquidation of Trust holdings.
• **Trading Platform Operational Problems**: The venues through which cryptocurrencies trade are relatively new and may be more exposed to operational problems or failure than traditional trading platforms.
• **Fraud and Market Manipulation**: Spot SOL markets may be exposed to fraud and market manipulation, including wash trading and front-running, which could adversely affect SOL's value.
• **Anonymity and Illicit Financing Risk**: The pseudonymous nature of SOL ownership and potential use in illicit activities could lead to increased regulatory scrutiny and reduced liquidity.
• **Political or Economic Crises**: Political or economic crises may motivate large-scale sales of SOL, resulting in a reduction in its price.
• **Validator Losses/Unattractiveness**: Validators may suffer losses due to staking penalties (slashing, inactivity leaks) or find staking unattractive, which could make the Solana network less attractive.
• **Unknown SOL Supply/Concentration**: The supply of accessible SOL is unknown, and entities with substantial holdings may engage in large-scale sales, reducing SOL's price.
• **Blockchain Fork**: A temporary or permanent blockchain fork could adversely affect an investment in the Shares, and the Sponsor's determination of the 'appropriate' network may not align with all shareholders.
• **Competition from Other ETPs**: Approval of competing digital asset-backed investment vehicles could reduce demand for SOL and adversely impact the value of the Shares.
• **Management and Operational Risks**: The Trust is subject to management risk due to reliance on the Sponsor and operational risks from service providers, including human error and cyber attacks.
• **Limited Indemnification**: Service providers have limited indemnification obligations to the Trust, which could negatively impact the Trust's ability to recover losses.
• **Staking Program Risks**: Staking involves temporary loss of liquidity, potential slashing losses, and regulatory/tax uncertainties, which could adversely affect the value of the Shares.
• **Benchmark Limitations**: The Benchmark has a limited history, and its methodology can change, potentially affecting the accuracy of SOL price tracking.
• **Pricing Risk**: The Trust's portfolio is priced based on estimated fair market value, which may differ from actual market prices, potentially affecting investor confidence.
• **Declining SOL per Share**: The amount of SOL represented by the Shares will decline over time due to the Sponsor Fee and other extraordinary expenses.
• **Conflicts of Interest**: The Sponsor and its affiliates are subject to conflicts of interest due to managing other accounts, differing fee structures, and investments in service providers (e.g., Coinbase Global).
• **Insider Trading Risk**: There is a risk that employees, officers, or directors associated with the Sponsor or its affiliates may engage in insider trading, despite policies, leading to harm for the Trust and Shareholders.
• **Limited Recourse**: The Solana Custodian has limited liability for losses, and the recourse of the Trust or Shareholders to the Trustee or Sponsor may be limited.

Future Outlook

The Trust expects to outperform the Lukka Prime Solana Reference Rate before expenses due to its plans to receive SOL staking rewards. The Sponsor intends to engage in staking substantially all of the Trust's SOL, subject to an amount maintained as unstaked SOL for liquidity management. The Sponsor, on behalf of the Trust, intends to liquidate certain staking rewards for cash to be distributed to Shareholders quarterly. The exact timeline and impact of recent regulatory developments on the Trust's business are uncertain, with ongoing legislative efforts and SEC initiatives aiming to clarify the regulatory framework for digital assets.

Management Comments

• The Sponsor believes that the Solana Custodian's policies, procedures, and controls for safekeeping, exclusively possessing, and controlling the Trust's SOL holdings are consistent with industry best practices to protect against theft, loss, and unauthorized and accidental use of the private keys.
• The Sponsor will continue to monitor and evaluate the Trust's risk management processes and policies and believes that the current risk management processes and procedures are reasonably designed and effective.
• The Sponsor does not anticipate that the need to fair value SOL will be a common occurrence.
• The Sponsor, on behalf of the Trust, intends to liquidate certain staking rewards for cash to be distributed to Shareholders quarterly.

Industry Context

StockSavvy.ai notes that the Invesco Galaxy Solana ETF (QSOL) enters a rapidly evolving digital asset ETF market, following the approval of spot Bitcoin and Ether ETPs. The Trust's focus on Solana, a blockchain known for its high transaction speed and Proof-of-History mechanism, positions it in a competitive landscape with other digital assets and potential future CBDCs. The recent regulatory clarity for stablecoins (GENIUS Act) and ongoing legislative efforts (CLARITY Act) indicate a maturing regulatory environment, which could both legitimize and constrain digital asset products. However, the Solana ecosystem's recent challenges, including network outages and DeFi protocol vulnerabilities, highlight the inherent risks and volatility specific to newer blockchain technologies compared to more established digital assets like Bitcoin.

Comparison to Industry Standards

• The Trust's 0.25% Sponsor Fee is competitive within the digital asset ETF space, often lower than some actively managed crypto funds but comparable to other passively managed spot crypto ETFs.
• The use of Coinbase Custody Trust Company, LLC, a NYSDFS-chartered limited purpose trust company, for SOL custody aligns with industry best practices for institutional digital asset safekeeping, similar to custodians used by other major spot crypto ETFs.
• The Trust's staking strategy aims to generate additional yield, a feature that differentiates it from some non-staking spot crypto ETFs and could potentially offer a performance advantage, assuming successful execution and favorable market conditions.
• The Solana network's historical annualized volatility of 95% (over three years ending September 30, 2025) and maximum annual price decrease of -42% (over three years ending September 30, 2025) are significantly higher than traditional asset classes and even some other digital assets, indicating a higher risk profile compared to, for example, Bitcoin's historical volatility.
• The Solana network's transaction speed of approximately 2,693 transactions per second on December 31, 2025, is notably higher than Bitcoin or Ethereum (pre-Merge), positioning it as a high-throughput blockchain, though this comes with its own set of scaling and stability risks as highlighted by past outages.

Management Changes

Corporate Governance

Legal Proceedings

• No legal proceedings were reported for the Trust.
• In 2023, the SEC charged certain large U.S. digital asset trading platforms (Binance, Coinbase, and Kraken) with supporting the trading and settlement of securities in violation of U.S. federal securities laws, though these actions were dismissed in 2025.

Related Party Transactions

• Invesco Ltd. (an affiliate of the Sponsor) purchased 4,000 Initial Seed Shares for $100,000 on October 16, 2025, and later redeemed them on December 10, 2025.
• Invesco Ltd. also created 175,000 shares on December 10, 2025, and held 150,000 shares as of December 31, 2025.
• Galaxy Blockchain Infrastructure LLC, an affiliate of the Execution Agent, serves as a Staking Provider for the Trust.
• Investment vehicles advised or managed by affiliates of the Sponsor hold a minority interest in Coinbase Global, the parent of Coinbase Inc. (Prime Broker and a Benchmark Pricing Source) and the Solana Custodian.

Stakeholder Impact

• **Shareholders**: Experienced a net loss and significant unrealized losses on their investment in SOL. They are subject to high volatility, regulatory risks, and potential tax liabilities from forks/airdrops. They benefit from staking rewards and the Sponsor covering ordinary expenses, but have limited voting rights.
• **Sponsor (Invesco Capital Management LLC)**: Manages the Trust, earns a 0.25% Sponsor Fee, and covers most ordinary expenses. Faces conflicts of interest due to managing other accounts and affiliations with service providers.
• **Authorized Participants**: Facilitate creation and redemption of shares. They face risks related to hedging, market liquidity, and operational issues of trading platforms.
• **Solana Custodian (Coinbase Custody Trust Company, LLC)**: Holds the Trust's SOL. Faces risks related to insolvency and cybersecurity.
• **Staking Provider (Galaxy Blockchain Infrastructure LLC)**: Stakes the Trust's SOL and earns a fee. Its success impacts the Trust's staking rewards.
• **Solana Network Community**: The Trust's operations and staking activities contribute to the Solana ecosystem, but the network itself faces challenges like scaling, governance, and security vulnerabilities.

Next Steps

• The Sponsor intends to engage in staking substantially all of the Trust's SOL, subject to a liquidity sleeve.
• The Sponsor, on behalf of the Trust, intends to liquidate certain staking rewards for cash to be distributed to Shareholders quarterly.
• The forthcoming hard fork 'Alpenglow' was announced by Solana network developers in May 2025, expected to reduce transaction finality time and enhance network security.
• The U.S. Congress is actively preparing new legislation to address certain market structure issues relating to digital assets and stablecoins.
• The proposed CLARITY Act, seeking to regulate digital assets markets and trading platforms, is under review by the Senate.
• The SEC's Crypto Task Force, led by Commissioner Hester Peirce, intends to develop a comprehensive and clear regulatory framework for digital assets, including final rules related to security status, registered offerings, and clarity regarding custody, lending, and staking.
• The Sponsor is studying the impact of proposed SEC amendments to custody rules on the Trust and its service providers.

Key Dates

Recommendation

The Trust reported a significant net loss and substantial unrealized losses on its Solana holdings during its initial operating period, reflecting a sharp decline in SOL's price due to ecosystem failures and broader market pressures. While staking rewards offer a potential upside, the high volatility, inherent risks of the Solana network (outages, smart contract vulnerabilities), and regulatory uncertainties create a highly speculative investment profile. The current financial performance and underlying asset's instability suggest a 'sell' recommendation for risk-averse investors, or at least a 'hold' for those with a high-risk tolerance and long-term conviction in Solana's recovery, given the immediate negative performance.

Keywords

Solana ETF, QSOL, Invesco Galaxy, Solana, SOL, Cryptocurrency ETF, Digital Asset ETF, Spot Price, Staking Rewards, SEC Filing, 10-K, Financial Report, Investment Trust, Blockchain, Proof-of-History, Proof-of-Stake, Coinbase Custody, Lukka Prime Solana Reference Rate, Market Volatility, Regulatory Risk, Cybersecurity Risk, Arbitrage, Net Asset Value, NAV, Financial Performance