Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 211

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 211
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 Shareholder held the Shares being redeemed. A subsequent sale of the XRP received the Shareholder generally will be
a taxable event.

After any sale or redemption
of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro rata share of the XRP held in the Trust
immediately after such sale or redemption generally will be equal to its tax basis in its share of the total amount of the XRP held in
the Trust immediately prior to the sale or 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 currency is a taxable event giving rise
to ordinary income equal to the value of the new digital currency. The Trust Agreement will require that, if such a transaction occurs,
the Trust will as soon as possible direct the 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