Company: TOXR
Filing Date: 2025-11-20
Form Type: S-1/A
Source: 0001213900-25-112826
Chunk: 231

Company: 21Shares XRP ETF
Filing Date: 2025-11-20
Form: S-1/A
Chunk 231
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 redemption, less the portion of such basis which is taken into account in determining the
amount of gain or loss recognized by the Shareholder upon such sale or cash redemption or, in the case of an in-kind redemption, that
is treated as the basis of the XRP received by the Shareholder in the redemption.

The Trust intends to disclaim
any digital assets created by a fork of the XRP Ledger. Although in certain circumstances the Sponsor may claim or receive new digital
assets created by such a fork and use good faith efforts to make those digital assets (or at the Sponsor’s discretion, the proceeds
thereof) available to Shareholders as of the record date of the fork, there can be no assurance that the Sponsor will do so. Therefore,
if a fork of the XRP Ledger results in holders of XRP receiving a new digital asset of value, the Trust and the Shareholders may not
participate in that value.

If a hard fork occurs in the XRP Ledger and the Trust claims the new forked asset, the Trust could hold both the original XRP and the new “forked” asset. Under current IRS guidance, a hard fork resulting in the receipt of new units of digital assets is a taxable event giving rise to ordinary income equal to the value of the new digital assets. The Trust Agreement will require that, if such a transaction occurs, the Trust will as soon as possible direct an XRP Custodian to distribute the new forked asset in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor will arrange to sell the new forked asset and for the proceeds to be distributed to the Shareholders. Such a sale will give rise to gain or loss, for U.S. federal income tax purposes, if the amount realized on the sale differs from the value of the new forked asset at the time it was received by the Trust. A hard fork may therefore give rise to additional tax liabilities for Shareholders.

While the IRS has not addressed
all situations in which airdrops occur, it is clear from the reasoning of current IRS guidance that it generally would treat an airdrop
as a taxable event giving rise to ordinary income. If the Trust were to receive the economic benefit of an airdrop, it would have similar
tax consequences to those described above for a hard fork. The Trust intends to disclaim any digital assets received in an airdrop offered
to holders of XRP. Therefore, if an airdrop results in holders of XRP