10-K: Fidelity Solana Fund 2025 Annual Report: Staking & Performance

Fidelity Solana Fund's 2025 annual report details its SOL staking strategy, significant asset growth, and regulatory clarity on Solana as a digital commodity.

Summary

• The Fidelity Solana Fund (the Trust) was formed on March 20, 2025, and commenced operations on November 17, 2025.
• The Trust's investment objective is to track the performance of Solana (SOL), as measured by the Fidelity Solana Reference Rate (the Index), adjusted for expenses, plus staking rewards.
• The Sponsor (FD Funds Management LLC) utilizes custodians to stake up to 100% of the Trust's SOL, receiving a portion of staking rewards.
• The SEC explicitly identified SOL as a digital commodity, not a security, in March 2026, providing significant regulatory clarity.
• Net assets increased from $3.2 million at commencement of operations (November 17, 2025) to $113.9 million as of December 31, 2025.
• Outstanding Shares grew from 200,000 to 7,775,000 during the period from November 17, 2025, to December 31, 2025.
• The price of SOL decreased by 7.87% from $135.38 on November 17, 2025, to $124.73 on December 31, 2025.
• The Net Asset Value (NAV) per Share decreased by 7.45% from $15.84 on November 17, 2025, to $14.66 on December 31, 2025.
• The net decrease in net assets resulting from operations for the period ended December 31, 2025, was $6.1 million, primarily due to $6.4 million in net unrealized depreciation on investment in SOL, partially offset by $0.3 million in net investment income from staking rewards.
• As of December 31, 2025, 72.00% of the Trust's SOL assets were staked, with an annualized trailing 30-day average gross and net staking reward rate of 4.51% (due to fee waivers).
• The Sponsor Fee (0.25% annually) and Staking Fees (15% of rewards) were waived in their entirety for six months from November 18, 2025, on the first $1.0 billion of Trust assets.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral filing. While the fund experienced significant asset growth and received positive regulatory clarity for SOL, the underlying asset's price and the fund's NAV declined during its initial operational period, leading to an unrealized depreciation.

Positives

• The Trust experienced significant growth in net assets, increasing from $3.2 million to $113.9 million during its initial operational period.
• Outstanding shares increased substantially from 200,000 to 7,775,000, indicating strong market demand for the product.
• The Sponsor Fee (0.25% annually) and Staking Fees (15% of rewards) are waived for six months from November 18, 2025, on the first $1.0 billion in assets, which benefits shareholders by reducing costs.
• The SEC explicitly classified SOL as a digital commodity, not a security, in March 2026, providing crucial regulatory clarity for the asset and the Trust.
• The Trust's investment objective includes capturing staking rewards, which is expected to lead to outperformance of the underlying Index before expenses.
• A robust cybersecurity risk management program is in place, leveraging Fidelity's Enterprise Cybersecurity organization, to protect the Trust and its assets.

Negatives

• The price of SOL decreased by 7.87% from $135.38 to $124.73 between November 17, 2025, and December 31, 2025.
• The Trust's NAV per Share decreased by 7.45% from $15.84 to $14.66 during the same period.
• A net decrease in net assets from operations of $6.1 million was reported, primarily due to $6.4 million in net unrealized depreciation on investment in SOL.
• The Trust's investment strategy is concentrated in a single asset (SOL), maximizing exposure to the inherent market risks of digital assets.
• Shareholders have limited statutory rights, no voting rights in most circumstances, and no direct voice in the Trust's operations or management.
• The Sponsor retains broad discretion, including the right to amend the Trust Agreement and potentially take actions that may be adverse to Shareholders' interests.
• Bringing a derivative action requires a high threshold of two or more unaffiliated Shareholders collectively holding at least 10.0% of outstanding Shares.

Risks

• **Digital Asset Market Volatility**: The value of Shares is highly sensitive to movements in the digital asset markets, particularly SOL, which can be volatile and unpredictable.
• **Concentration Risk**: The Trust's investment strategy is concentrated solely in SOL, meaning any losses from a decrease in SOL's value will not be offset by diversification.
• **Limited Shareholder Rights**: Shareholders have limited statutory rights, no voting rights in most circumstances, and no direct involvement in the Trust's management or operations.
• **Sponsor Discretion**: The Sponsor has broad authority to amend the Trust Agreement and may take actions that could be adverse to Shareholders' interests.
• **Derivative Action Threshold**: A high threshold of 10.0% of outstanding Shares, held by two or more unaffiliated Shareholders, is required to bring a derivative action.
• **SOL Staking Risks**: Staking involves temporary inaccessibility of SOL during bonding/unbonding periods (approximately 2 days, potentially longer), risk of slashing penalties for malicious activity or malfunctions, and liquidity risks if unstaking delays prevent the Trust from meeting short-term obligations.
• **Solana Network Technology Risks**: Proof-of-history is a novel and not widely used technology, which may not function as intended, have unforeseen vulnerabilities, or require specialized hardware. Flaws in Solana's cryptography or protocol could impair network functionality or expose it to attacks. The Solana network has experienced past outages and performance disruptions (e.g., a 17-hour outage on September 14, 2021).
• **Network Attacks**: The Solana network is vulnerable to various forms of attack, including denial-of-service, congestion-related attacks, and potential disruption if a malicious actor obtains a sufficiently large proportion of staked SOL.
• **Regulatory Uncertainty**: Despite the SEC's classification of SOL as a digital commodity, uncertainty remains regarding certain aspects of digital asset regulation. Future regulatory actions could alter the nature of the investment or the Trust's operations. The U.S. federal income tax treatment of SOL is still evolving and may change retroactively, and there's a risk the Trust could lose its grantor trust status.
• **Market Manipulation**: Although the Index methodology aims to deter manipulation by using a volume-weighted median price from multiple spot markets, sustained or coordinated manipulation efforts could still impact the NAV.
• **Creation/Redemption Process Limitations**: The Sponsor has the absolute right to reject purchase orders or limit creations, and may suspend creation or redemption transactions during market disruptions or stressed liquidity conditions, which could cause Shares to trade at premiums or discounts to NAV.
• **Fork/Airdrop Risks**: Hard forks in the Solana network could give rise to additional tax liabilities for Shareholders. The Trust intends to disclaim airdropped digital assets, meaning Shareholders will not participate in their value.
• **Third-Party Service Provider Risk**: The Trust relies on a limited number of node operators and custodians for staking activities, and disruptions from these providers could adversely impact operations.
• **Cybersecurity Risks**: Despite robust cybersecurity programs, a successful cyber incident could materially impact Fidelity or the Trust's operations, financial condition, and business strategies.

Future Outlook

The Trust expects to continue tracking SOL performance, adjusted for expenses, plus staking rewards, aiming to outperform the Index before expenses. The Sponsor may explore utilizing liquid staking tokens (LSTs) or purchasing staked SOL from third-parties in the future to generate staking rewards, contingent on legal, regulatory, and tax risk assessments. The SOL supply inflation rate is projected to decline to a long-term rate of 1.5% through scheduled decrements. The Solana network has several planned upgrades, including the Alpenglow Consensus Protocol and increased block space, intended to enhance transaction finality, network responsiveness, throughput, and latency.

Management Comments

• The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in SOL without purchasing, holding and trading SOL directly.
• The Sponsor believes that use of the Index mitigates against idiosyncratic market risk, as the failure of any individual spot market will not materially impact pricing for the Trust. It also allows the Administrator to calculate the NAV in a manner that significantly deters manipulation.
• The Sponsor expects that its SOL trading counterparties will be able to provide pricing based on the Index price at 4:00 p.m. EST, which would minimize or eliminate any such shortfall.
• The Sponsor does not believe that the Trust's ability to arrive at such a determination [to limit creations] will have a significant impact on the Shares in the secondary market because it believes that the ability to create Shares would be reinstated shortly after such determination is made, and any entity desiring to create Shares would be able to do so once the ability to create Shares is reinstated.

Industry Context

StockSavvy.ai notes that the Fidelity Solana Fund's launch and rapid asset growth reflect the increasing institutional interest and productization of major cryptocurrencies beyond Bitcoin and Ethereum. The SEC's explicit classification of SOL as a digital commodity provides crucial regulatory clarity, potentially de-risking the asset for broader institutional adoption, aligning with a trend of regulatory bodies attempting to define the legal status of various digital assets. The fund's staking strategy positions it to capture additional yield, a key differentiator in the competitive digital asset ETP market, as investors seek ways to generate income from their crypto holdings. The focus on Solana's unique Proof-of-History and Proof-of-Stake mechanisms highlights the ongoing innovation in blockchain technology, aiming for higher throughput and scalability compared to older networks.

Comparison to Industry Standards

• The fund's 0.25% Sponsor Fee (waived for 6 months) is competitive with other digital asset ETPs, such as the initial fee waivers seen in some spot Bitcoin ETFs upon their launch, aiming to attract early investors.
• The 15% Staking Fee (waived for 6 months on the first $1.0 billion in assets) is comparable to or slightly lower than staking fees charged by some direct staking platforms or other crypto funds that offer staking yield, which typically range from 10-20% of staking rewards.
• The use of a volume-weighted median price (VWMP) methodology for NAV calculation, incorporating multiple spot markets (Bitstamp, Coinbase, Crypto.com, Gemini, Kraken, LMAX Digital), is a robust approach to mitigate manipulation, similar to best practices adopted by leading crypto index providers like Coin Metrics.
• The fund's rapid asset accumulation to $113.9 million within a short operational period (November 17 December 31, 2025) demonstrates strong market demand, comparable to the initial inflows experienced by successful spot Bitcoin ETFs, indicating significant investor appetite for regulated crypto investment vehicles.

Corporate Governance

Related Party Transactions

• FMR Capital, Inc., an affiliate of the Sponsor, acted as the Seed Capital Investor, purchasing initial shares of the Trust.
• Fidelity Service Company, Inc., an affiliate of the Sponsor, serves as the Trust's Administrator, providing administrative, tax, and accounting services, with all related fees and expenses borne by the Sponsor.
• Fidelity Distributors Company LLC, an affiliate of the Sponsor, serves as the Distributor, responsible for reviewing and approving marketing materials, with all related fees and expenses borne by the Sponsor.
• Fidelity Product Services LLC, an affiliate of the Sponsor, serves as the Index Provider, responsible for the methodology and oversight of the Fidelity Solana Reference Rate, with all related fees and expenses borne by the Sponsor.
• The Sponsor (FD Funds Management LLC) is a wholly-owned subsidiary of FMR LLC.
• The Sponsor is contractually obligated to assume and pay most ordinary course expenses of the Trust, excluding taxes and Staking Fees.
• The Sponsor and the Trust entered into a Fee Waiver Agreement, under which the Sponsor waived the Sponsor Fee and Staking Fees for a specified period.
• Staking Fees, which are a portion of the staking rewards received by the Trust, are allocated amongst the Sponsor, custodian(s), and node operator(s).

Stakeholder Impact

• **Shareholders**: Gain exposure to SOL through a traditional brokerage account, benefit from staking rewards (currently enhanced by fee waivers), but are subject to SOL price volatility, limited governance rights, and potential for Shares to trade at premiums/discounts to NAV.
• **Sponsor (FD Funds Management LLC)**: Manages the Trust's operations, benefits from the Sponsor Fee and a portion of Staking Fees (currently waived), and bears most ordinary course expenses, aligning its interests with the Trust's performance.
• **Custodians (Anchorage Digital Bank N.A., BitGo Bank & Trust N.A., Coinbase Custody Trust Company, LLC)**: Provide secure custody for SOL and facilitate staking activities, receiving a portion of the Staking Fees.
• **Node Operators**: Perform transaction validation services on the Solana network, contributing to network security and earning staking rewards, a portion of which is shared as Staking Fees.
• **Authorized Participants**: Facilitate the creation and redemption of Baskets, ensuring market liquidity, but are responsible for transaction fees and bear the risk of price differences in cash creation orders.
• **Regulatory Authorities (SEC, CFTC, IRS)**: The filing demonstrates compliance with reporting requirements and addresses regulatory clarity, particularly the SEC's classification of SOL as a digital commodity, which impacts the broader digital asset regulatory landscape.

Next Steps

• The Sponsor may seek to utilize liquid staking tokens (LSTs) or purchase staked SOL from third-parties as alternative methods of generating staking rewards in the future, subject to legal, regulatory, or tax risk assessment.
• The 8% initial SOL supply inflation rate is scheduled to decline in 15% increments about once a year until a long-term inflation rate of 1.5% is reached.
• Several planned upgrades to the Solana network are in various stages of development and implementation, including the Alpenglow Consensus Protocol and increased block space, aiming to improve transaction finality, network responsiveness, throughput, and latency.
• The fee waiver period for the Sponsor Fee and Staking Fees is scheduled to end on May 18, 2026, unless extended by the Sponsor in its sole discretion.

Key Dates

Recommendation

The Fidelity Solana Fund's 2025 annual report presents a mixed picture. While the fund achieved significant asset growth and benefited from regulatory clarity classifying SOL as a digital commodity, the underlying asset's price and the fund's NAV experienced a notable decline during its initial operational period. The fee waivers are a positive short-term incentive, but the inherent volatility and concentration risk of a single digital asset, coupled with the fund's limited shareholder governance, suggest a 'hold' recommendation for seasoned investors. A 'hold' allows investors to maintain exposure to the potential upside of Solana while acknowledging the current price depreciation and the nascent stage of the fund's operations and the broader digital asset market.

Keywords

Solana, SOL, Fidelity Solana Fund, FSOL, Cryptocurrency ETF, Digital Asset, Staking, Proof-of-Stake, Proof-of-History, SEC Filing, 10-K, Investment Fund, Crypto Commodity, NYSE Arca