21Shares Solana ETF Annual Report - How They Did This Year

I’ve put together this guide to help you understand the 21Shares Solana ETF (ticker: TSOL). Think of this as a plain-English breakdown to help you decide if it fits your investment goals.

1. What is this "company"?

The 21Shares Solana ETF isn't a business. It has no CEO, employees, or products. Instead, think of it as a digital vault. When you buy shares, the fund uses your money to hold actual Solana (SOL) tokens for you. It aims to mirror the price of Solana. This lets you invest through your regular brokerage account without managing complex digital wallets or security keys. The fund currently holds about $490 million in assets, which are kept in secure, offline storage by Coinbase Custody.

2. How does it make money (and what does it cost)?

Since this isn't a company, it doesn't earn "profit" or "revenue." Its value depends entirely on the price of Solana.

The fund charges a 0.21% annual fee to cover custody, administration, and marketing. The fund pays this by selling a tiny amount of its Solana each week, which causes a small, daily reduction in the amount of SOL each share represents.

Pro-tip: The fund is exploring "staking"—a way to earn extra Solana by helping secure the network. If they do this, they plan to pass some rewards to you, though there is no guarantee this will happen or that it will be significant. Staking usually yields 5% to 7% annually, but the fund must clear complex legal hurdles first.

3. Major wins and challenges

• The Win: It launched on the Cboe BZX Exchange in mid-2024, giving everyday investors a regulated, secure way to invest in Solana.
• The Challenge: The fund is brand new and faces stiff competition from other crypto products. It also faces "liquidity risk." If daily trading volume—currently $15 million to $25 million—drops, the gap between buying and selling prices may widen, making it more expensive to enter or exit your position.

4. Key risks (The "Fine Print")

• Volatility: Solana is a high-risk asset. Prices swing wildly, and you could lose a large portion of your investment. Solana has dropped over 30% in a single month within the last year.
• Taxable Events: The fund sells Solana to pay its costs, which can trigger taxes for you. Because it is a grantor trust, you may owe taxes on "phantom income" or capital gains even if you don't sell your shares.
• Limited Control: You have no voting rights. The sponsor makes all decisions, including whether to close the fund. If the fund becomes too small to be profitable, they may sell the assets and return the cash to you without your input.
• No "Safety Net": This fund lacks the protections of the Investment Company Act of 1940. It doesn't have the same independent board oversight or diversification rules as a standard mutual fund.

5. Future outlook

The goal is simple: track the price of Solana, minus the 0.21% fee. There is no "growth strategy" other than the performance of the Solana network itself. If you believe in the long-term value of Solana—which processes over 2,000 transactions per second—this is a straightforward way to invest. If you want a company that innovates or pays dividends, this isn't it. The fund’s future depends on institutional interest and U.S. crypto regulations.

---

Final Decision Checklist:

• Are you comfortable with high volatility? Solana prices can drop significantly in short periods.
• Do you understand the tax implications? Consult a tax professional about how "grantor trust" status affects your specific situation.
• Is this a long-term play? Since there are no dividends or company growth, this is purely a bet on the price of the underlying token.