Company: TOXR
Filing Date: 2025-11-20
Form Type: S-1/A
Source: 0001213900-25-112826
Chunk: 91

Company: 21Shares XRP ETF
Filing Date: 2025-11-20
Form: S-1/A
Chunk 91
---
 of the
Shares will generally also decline.

The inability of XRP Counterparties to hedge their XRP exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.

Authorized Participants and
market makers will generally want to hedge their exposure in connection with Basket creation and redemption orders. To the extent Authorized
Participants and market makers are unable to hedge their exposure due to market conditions (e.g., insufficient XRP liquidity in the market,
inability to locate an appropriate hedge counterparty, etc.), such conditions may make it difficult for Authorized Participants to create
or redeem Baskets (or cause them to not create or redeem Baskets). In addition, the hedging mechanisms employed by XRP Counterparties
to hedge their exposure to XRP may not function as intended, which may make it more difficult for them to enter into such transactions.
Such events could negatively impact the market price of Shares and the spread at which Shares trade on the open market. The liquidity
of the market will depend on, among other things, the adoption of XRP and the commercial and speculative interest in the market.

Arbitrage transactions intended to keep the price of Shares closely linked to the price of XRP may be problematic if the process for the creation and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.

If the processes of creation
and redemption of the Shares encounter any unanticipated difficulties, potential market participants who would otherwise be willing to
purchase or redeem Baskets to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares
and the price of the underlying XRP may not take the risk that, as a result of those difficulties, they may not be able to realize the
profit they expect. If this is the case, the liquidity of Shares may decline and the price of the Shares may fluctuate independently
of the price of XRP and may fall.

The use of cash creations and redemptions, as opposed to in-kind creations and redemptions, may adversely affect the arbitrage transactions by Authorized Participants intended to keep the price of the Shares closely linked to the price of XRP and, as a result, the price of the Shares may fall or otherwise diverge from NAV.

Authorized Participants must
be registered broker-dealers. Registered broker-dealers are subject to various requirements of the federal securities laws and rules,
including financial responsibility rules such as the customer protection rule, the net capital rule and recordkeeping requirements. On
May 15, 202