Company: TOXR
Filing Date: 2025-11-07
Form Type: S-1/A
Source: 0001213900-25-107665
Chunk: 92

Company: 21Shares XRP ETF
Filing Date: 2025-11-07
Form: S-1/A
Chunk 92
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 facilitate in-kind
creations and redemptions in connection with spot digital asset exchange-traded products; however, there is as yet no definitive regulatory
guidance on the specific details of how registered broker-dealers can comply with SEC rules with regard to transacting in or holding
spot XRP. Absent further regulatory clarity regarding whether and how registered broker-dealers can hold and deal in XRP under applicable
broker-dealer financial responsibility and other rules, there is a risk that registered broker-dealers participating in the in-kind creation
or redemption of Shares for XRP may be unable to demonstrate compliance with such rules. While compliance with rules such as the customer
protection rule, the net capital rule and recordkeeping requirements are primarily the broker-dealer’s responsibility, a national
securities exchange is required to enforce compliance by its member broker-dealers with applicable federal securities law and rules.
Only certain Authorized Participants at present have the ability (either acting themselves or through their affiliates) to support in-kind
creation and redemption activity.

Even with the SEC Staff’s
recent statement clarifying that in-kind creations and redemptions are permitted, the Trust’s limited ability to facilitate in-kind
creations and redemptions could result in the exchange-traded product arbitrage mechanism failing to function as efficiently as it otherwise
would, leading to the potential for the Shares to trade at premiums or discounts to the NAV per Share, and such premiums or discounts
could be substantial. Furthermore, if cash creations or redemptions are unavailable, either due to the Sponsor’s decision to reject
or suspend such orders or otherwise, Authorized Participants will be limited in their ability to redeem or create Shares, in which case
the arbitrage mechanism may not function as efficiently. This could result in impaired liquidity for the Shares, wider bid/ask spreads
in secondary trading of the Shares and greater costs to investors and other market participants. In addition, the Trust’s limited
ability to facilitate in-kind creations and redemptions, and resulting relative reliance on cash creations and redemptions, could cause
the Sponsor to halt or suspend the creation or redemption of Shares during times of market volatility or turmoil, among other consequences.
Further, there can be no assurance that broker-dealers would be willing to serve as Authorized Participants with respect to the in-kind
creation and redemption of Shares. Any of these factors could adversely affect the performance of the Trust and the value of the Shares.

<div align='center'>41</div>

The use of cash creations
and