Company: TOXR
Filing Date: 2025-11-07
Form Type: S-1/A
Source: 0001213900-25-107665
Chunk: 36

Company: 21Shares XRP ETF
Filing Date: 2025-11-07
Form: S-1/A
Chunk 36
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 other government or regulatory enforcement actions have led, and may in the future
lead, to further volatility in digital asset prices.

Whether a digital asset is
offered or sold as a security under the U.S. federal securities laws depends on whether it is included in the lists of instruments
making up the definition of “security” in the 1933 Act, the Exchange Act and the 1940 Act. Digital assets do not appear
in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has
typically analyzed whether a particular digital asset is offered or sold as a security by reference to whether it meets the tests developed
by the federal courts interpreting these terms, known as the “Howey” and “Reves” tests, respectively. For many
digital assets, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments
can often be made both in favor of and against a particular digital asset qualifying as being offered or sold as a security under one
or both of the Howey and Reves tests. Adding to the complexity, the SEC staff has indicated that the security status of a particular
digital asset can change over time as the relevant facts evolve.

If the Sponsor determines
that XRP is offered or sold as a security under the U.S. federal securities laws, whether that determination is initially made by
the Sponsor itself, or because a federal court upholds an allegation that XRP is offered or sold as a security, the Sponsor does not
intend to permit the Trust to continue holding XRP in a way that would violate the federal securities laws (and therefore would either
dissolve the Trust or potentially seek to operate the Trust in a manner that complies with the federal securities laws, including the
1940 Act).

Any enforcement action by
the SEC or a state securities regulator asserting that XRP is offered or sold as a security, or a court decision to that effect, would
be expected to have an immediate material adverse impact on the trading price of XRP, as well as the Shares. This is because the business
models behind most digital assets are incompatible with regulations applying to transactions in securities. If a digital asset is determined
to be offered and sold as a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied
in the United States through the same channels used by non-security digital assets, which in addition to