Fidelity files S-1 for Solana spot ETF with staking options

Asset management firm and ETF issuer Fidelity has officially submitted an S-1 registration filing for a Solana spot ETF. The exchange-traded fund will also include staking options for users.

Fidelity isn’t the only firm eyeing a SOL ETF, with a flurry of companies issuing SOL ETF S-1 amendments on Friday, including VanEck, 21Shares, Bitwise, Grayscale, Canary Capital, and Franklin Templeton. VanEck was the first U.S. company to file for a spot Solana ETF in June 2024 and was also the last to submit its amended S-1 filing for the day.

Fidelity advances toward a spot SOL ETF

Fidelity submitted its S-1 statement Friday to the U.S. Securities and Exchange Commission (SEC). The firm acknowledged that the proposed Fidelity Solana Fund would operate as a Delaware statutory trust. 

The ETF’s goal is to mirror SOL’s performance based on the Fidelity Solana Reference Rate Index, which calculates price data using a volume-weighted median price after 15 seconds. The index aggregates prices from eligible spot markets and reflects the real-time value of SOL in U.S. dollars.

The ETF issuer revealed that the fund aims to keep SOL in custody and earn extra yield by staking some of its holdings through vetted providers. The resulting staking rewards will be treated as income and distributed accordingly. 

Fidelity has named a custodian who will store all SOL in segregated accounts on behalf of the trust. According to the company, most assets will be held in cold storage with limited SOL in hot wallets for transactions.

The firm also plans to list shares on the Cboe BZX Exchange, though the ticker symbol remains undisclosed. According to Fidelity, shares will be created and redeemed in large blocks called Baskets, mainly by authorized participants using either SOL or cash.

The asset management firm added that daily net asset value (NAV) will be calculated using the same index method applied to SOL pricing. The filing also revealed an annual sponsor fee tied to the fund’s SOL assets, though the percentage remains undisclosed. Fidelity said the fee will cover most standard operating expenses, except for unusual costs and a separate staking-related fee paid to the custodian from staking rewards.

Fidelity’s affiliate, FD Funds Management LLC, will sponsor the product. The firm said the Trust will not use leverage, derivatives, or complex instruments, keeping the structure simple for traditional investors.

According to the asset management company, the custodian will control all private keys, and the sponsor will oversee staking activities and manage security. The Trust’s assets, including staked SOL, are not protected by the FDIC or SIPC insurance.

To initiate the momentum, a sponsor affiliate purchased a single Seed Share to set up the fund. Fidelity also clarified that the trust isn’t registered under the Investment Company Act of 1940, which means investors won’t receive the same regulatory protections given to traditional mutual funds or ETFs that fall under that law.

The trust needs registration approval from the SEC before sales can commence. Fidelity has labeled the trust as an emerging growth company, allowing it to follow scaled-back reporting rules initially. 

SEC urges ETF issuers to update their S-1 filings by June

The latest filing follows the U.S. SEC’s directive last week for spot Solana ETF issuers to update their S-1 filings by June. Bloomberg’s ETF analyst Eric Balchunas said at the time that the agency’s request indicates it’s more likely than before to approve some of the products, giving a timeline of two to four months for spot SOL ETFs to go live. Bloomberg analyst James Seyffart doubts the Solana ETF approval will come as soon as next week.

“I think there needs to be a back and forth with the SEC and issuers to iron out details, so I doubt it. If anyone remembers the Bitcoin ETF launch, there were a lot of filings over the preceding couple months before launch.”

–James Seyffart, ETF Analyst at Bloomberg

The regulator also reportedly asked issuers to update language surrounding in-kind redemptions and how issuers would approach staking. Firms have been advocating for the agency to approve Ethereum and Solana staking ETFs, which would earn holders staking yield. 

The SEC has approved spot Bitcoin and Ethereum ETFs as well as several blended crypto-equity funds. ETF issuers, including VanEck, 21Shares, and Canary Capital, recently urged the agency to practice a first-to-file approach, where the SEC prioritizes greenlighting financial products based on the order of arrival

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