Company: TOXR
Filing Date: 2025-10-10
Form Type: S-1/A
Source: 0001213900-25-098141
Chunk: 214

Company: 21Shares XRP ETF
Filing Date: 2025-10-10
Form: S-1/A
Chunk 214
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 Shareholders as ordinary dividend income. However, due to the uncertain
treatment of digital assets for U.S. federal income tax purposes, there can be no assurance
in this regard. Except as otherwise indicated, the remainder of this discussion assumes that
the Trust is classified as a grantor trust for U.S. federal income tax purposes.

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Taxation of U.S. Shareholders

Each Shareholder will be treated,
for U.S. federal income tax purposes, as if it directly owned a pro rata share of the underlying assets held in the Trust. A Shareholder
also will be treated as if it directly received its respective pro rata share of the Trust’s income, if any, and as if it directly
incurred its respective pro rata share of the Trust’s expenses. In the case of a Shareholder that acquires Shares as part of the
creation of a Basket, the delivery of XRP to the Trust in exchange for a pro rata share of the underlying XRP represented by the Shares
will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s pro
rata share of the XRP held in the Trust will be the same as its tax basis and holding period for the XRP delivered in exchange therefor.
For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the
same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple
lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying XRP
related to such Shares.

Current IRS guidance on
the treatment of convertible virtual currencies classifies XRP as “property” that is not currency for U.S. federal income
tax purposes and clarifies that XRP can be held as a capital asset, but it does not address several other aspects of the U.S. federal
income tax treatment of XRP. Because XRP is a new technological innovation, the U.S. federal income tax treatment of XRP or
transactions relating to investments in XRP may evolve and change from that discussed below, possibly with retroactive effect. In this
regard, the IRS has indicated that it has made it a priority to issue additional guidance related to the taxation of virtual currency
transactions, such as transactions involving XRP.