Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 209

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 209
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 as a capital asset, but it does not address several other aspects of the U.S. federal
income tax treatment of XRP. Because XRP is a new technological innovation, the U.S. federal income tax treatment of XRP or
transactions relating to investments in XRP may evolve and change from that discussed below, possibly with retroactive effect. In this
regard, the IRS has indicated that it has made it a priority to issue additional guidance related to the taxation of virtual currency
transactions, such as transactions involving XRP. In addition, the IRS and U.S. Treasury Department have issued final regulations
regarding the tax information reporting obligations for certain digital asset transactions. While the U.S. federal government has
started to issue such additional guidance, whether any future guidance will adversely affect the U.S. federal income tax treatment
of an investment in XRP or in transactions relating to investments in XRP is unknown. Moreover, future developments that may arise with
respect to digital assets may increase the uncertainty with respect to the treatment of digital assets for U.S. federal income tax
purposes.

The Trust will use XRP
to pay certain expenses of the Trust, which under current IRS guidance will be treated as a sale of such XRP. Although the Trust
generally does not intend to sell XRP, it may do so in connection with cash redemption transactions, or if necessary to pay certain expenses
that must be paid in cash. If the Trust sells XRP (for example to generate cash to pay fees or expenses) or is treated as selling XRP
(for example by using XRP to pay fees or expenses) for purposes other than funding a cash redemption, a Shareholder will recognize gain
or loss in an amount equal to the difference between (a) the Shareholder’s pro rata share of the amount realized by the Trust
upon the sale and (b) the Shareholder’s tax basis for its pro rata share of the XRP that was sold. A Shareholder’s tax
basis for its share of any XRP sold by the Trust will generally be a pro rata portion of the Shareholder’s total tax basis for
its share of all of the XRP held in the Trust. After any such sale, a Shareholder’s tax basis for its pro rata share of the XRP
remaining in the Trust should be equal to its tax basis for its share of the total amount of the XRP held in the Trust immediately prior
to the sale less the portion of