Fidelity Moves Forward with Solana ETF Amid Expanding Market

Wall Street's Solana Bet Advances as Fidelity Updates ETF Filing

Fidelity Investments has made progress in its registration process for a Solana ETF by filing a pre-effective amendment with the Securities and Exchange Commission (SEC). This move aims to simplify the path to automatic effectiveness for the fund.

The filing indicates that the fund will stake all of its SOL assets to improve returns beyond the Fidelity Solana Reference Rate. Additionally, it will levy a 0.25% annual fee, which will be waived for the initial six months post-launch.

This development positions Fidelity to enter a rapidly evolving Solana ETF marketplace, which has already welcomed three competing products on U.S. exchanges, gathering over $81 million in first-day inflows collectively.

Fidelity’s Bold Staking Strategy

The Fidelity Solana Fund intends to stake up to 100% of its SOL tokens through trusted custodians such as Anchorage Digital, BitGo, and Coinbase Custody, with collaborations including Coinbase Crypto Services and Figment as node operators.

Staking rewards will incur a 15% fee, which will be distributed among the sponsor, custodians, and operators. The Trust is expected to unstake SOL within two days to meet redemption needs.

Trading under the ticker FSOL on an undisclosed exchange, the fund will facilitate creation and redemption baskets consisting of 25,000 shares, which can be settled in either SOL or cash.

To implement this dual-settlement strategy, Fidelity has established trading agreements with various counterparties, including Cumberland DRW, Jane Street Capital affiliates, and Virtu Americas, to ease cash creations.

Despite this ambitious plan, Fidelity’s filing acknowledges considerable regulatory risks. The SEC has previously labeled SOL as a security in enforcement actions, though some of these cases have been dismissed or resolved.

The registration also notes that a definitive security classification for SOL could significantly affect its trading value and might lead to the fund's liquidation.

Early Movers: Bitwise Sets the Pace

As Fidelity prepares its entry, early entrants have already captured a considerable market share.

On October 28, Bitwise’s Solana ETF amassed $69.5 million during its debut, nearly six times more than the $12 million raised by Rex-Osprey’s competing product.

The Bitwise Solana Fund stakes its entire portfolio in-house to achieve the network’s full yield while charging a 0.20% management fee, waived for the first three months.

Shortly after, Grayscale introduced its Solana Trust ETF on NYSE Arca, converting a private trust established in 2021 containing 525,387 SOL tokens.

The Grayscale fund has a 0.35% expense ratio and stakes 74.89% of its assets, delivering 77% of staking rewards to investors after expenses.

On the other hand, Rex-Osprey’s SSK employs a mixed strategy, holding 54% in direct Solana, 43.5% in a Swiss-listed CoinShares ETP, and the remainder in JitoSOL and cash.

Monthly staking rewards distributed by this fund are categorized as return of capital for tax purposes, with an expense ratio of 0.75%.

Institutional Interest Challenges Layer 1 Dynamics

In a conversation with Cryptonews, Maria Carola, CEO of StealthEX, regards the recent Solana ETF launches as pivotal moments in the blockchain competition landscape.

“The introduction of a spot ETF on Solana signifies a breakthrough in the prolonged quest for supremacy in the Layer 1 blockchain arena,” she said.

She noted that institutional investors are now prompted to view Solana as a distinct macro asset. Projections suggest a remarkable $3 billion in ETF inflows over the next 12-18 months, contingent on Solana sustaining its growth momentum in decentralized finance (DeFi) and network reliability.

“While Solana embodies speed, scalability, and technical finesse, it still represents short-term liquidity cycles and the transient excitement of meme tokens for many investors,” she explained. “A single ETF won’t change this image immediately.”

Carola acknowledged Ethereum's dominant stance, with over $60 billion entangled in DeFi and a mature staking ecosystem that consistently attracts institutional investments seeking stability.

“Ultimately, it is Ethereum’s fundamentals, such as stability, reputation, and integration with the global financial system that ensure its leadership,” she noted.

However, she advocates for a dual-model coexistence where “Ethereum provides the foundational trust and settlement layer within the on-chain economy, while Solana acts as its high-performance execution engine.”

Despite the positive buzz surrounding ETF launches, the immediate price movements for SOL appear uncertain.

According to Polymarket, Solana has a 25% probability (a 2% drop from the previous day) of achieving a new all-time high prior to 2026, currently trading at $196, reflecting a nearly 1% gain over the last 24 hours.

Wall Street's Solana Bet Advances as Fidelity Updates ETF Filing

Outside the United States, momentum for Solana ETFs is also boosting following Hong Kong's approval of a spot fund from China Asset Management, which commenced trading on October 27 with a minimum investment requirement of $100.

Key Takeaways

Fidelity has filed for a Solana ETF, staking all SOL holdings for higher returns.
Early entrants like Bitwise and Grayscale have already secured significant market shares.
Institutional interest in Solana could reshape the Layer 1 blockchain space.
Despite optimism, immediate price outlook for SOL remains ambiguous.