S-1/A: Grayscale XRP Trust ETF Files S-1/A for NYSE Arca Listing

Grayscale XRP Trust, soon to be Grayscale XRP Trust ETF, has filed an S-1/A registration statement with the SEC, signaling its intent to list on NYSE Arca under the symbol GXRP and offer continuous share creations.

Summary

• The Trust, Grayscale XRP Trust, plans to rename to Grayscale XRP Trust ETF and list its shares on NYSE Arca under the symbol GXRP.
• Its investment objective is to reflect the value of XRP held by the Trust, less expenses and liabilities, providing investors with cost-effective exposure to XRP.
• Shares will be issued in Baskets of 10,000 shares, initially only through 'Cash Orders' where a Liquidity Provider handles XRP transactions.
• The Trust currently cannot facilitate 'In-Kind Orders' (direct XRP for shares) and requires regulatory approval for this functionality.
• The Sponsor's Fee is an annual rate of 2.5% of the NAV Fee Basis Amount, paid daily in XRP.
• The Trust will irrevocably abandon all 'Incidental Rights' and 'IR Virtual Currency' (e.g., from forks or airdrops), meaning shareholders will not benefit from these.
• As of June 30, 2025, net assets increased to $12,893 thousand, up 23% from $10,450 thousand at December 31, 2024.
• The XRP price appreciated from $2.10 per XRP on December 31, 2024, to $2.32 per XRP on June 30, 2025.
• The Trust's operations commenced on September 5, 2024, and it has not yet operated a redemption program, though it intends to rely on an SEC exemption to do so upon listing.

Sentiment

Score: 7

Explanation: The filing indicates significant progress towards listing a spot XRP ETF, with positive financial performance driven by XRP price appreciation. However, substantial regulatory uncertainties, particularly regarding in-kind creations/redemptions and XRP's security status, along with the policy of abandoning airdrop benefits, introduce considerable risks that temper overall sentiment.

Positives

• The intent to list on NYSE Arca under the symbol GXRP is a significant step towards broader market accessibility for XRP exposure.
• The Trust employs robust security measures, including offline 'cold storage' for a substantial portion of its XRP and geographically distributed private key shards, to protect assets.
• The Sponsor's management team has extensive experience in the digital asset industry, including managing other investment vehicles.
• The Trust's net assets increased by 23% to $12,893 thousand for the six months ended June 30, 2025, driven by XRP price appreciation.
• The Sponsor assumes and pays most ordinary-course operational and periodic expenses, excluding taxes, which simplifies the cost structure for the Trust.

Negatives

• The Trust currently lacks the ability to facilitate 'in-kind' creations and redemptions of shares, relying solely on 'Cash Orders' which may lead to operational inefficiencies and wider premiums/discounts to NAV.
• Shareholders will not receive the benefits of any forks or airdrops, as the Trust is committed to irrevocably abandoning all 'Incidental Rights' and 'IR Virtual Currency'.
• The Trust's reliance on a limited number of third-party service providers (e.g., Coinbase as Custodian/Prime Broker, specific Authorized Participants) introduces concentration risk.
• The Sponsor has no fiduciary duties to the Trust or its shareholders beyond what is explicitly stated in the Trust Agreement, potentially allowing for conflicts of interest.
• The fixed supply of XRP, combined with burning as transaction fees, could create deflationary pressure and liquidity issues in the distant future, making it less practical as a medium of exchange.

Risks

• Extreme volatility of XRP trading prices could materially adversely affect the value of the Shares, potentially leading to substantial losses.
• Regulatory uncertainty regarding whether XRP or other digital assets are classified as securities could adversely affect XRP's value and potentially lead to the Trust's termination or extraordinary expenses.
• The largely unregulated nature and lack of transparency in Digital Asset Trading Platforms may expose XRP to fraud, market manipulation, business failures, or security breaches.
• A temporary or permanent 'fork' or 'clone' of the XRP Network could adversely affect the value of the Shares or the Trust's operations, and the Sponsor's discretion in choosing the 'true' network may not align with maximum value.
• Concentrated ownership of XRP by entities like Ripple Labs and early stakeholders could lead to large sales or distributions that adversely affect market price.
• The lack of active trading markets for the Shares, or illiquid markets, may result in losses at disposition or exacerbate variability between the Trust's NAV and market price.
• Security threats to the Trust's Vault Balance or Settlement Balance could result in loss of assets, halting of operations, or damage to reputation.
• XRP transactions are irrevocable, meaning stolen or incorrectly transferred XRP may be irretrievable, leading to potential losses.
• The lack of full insurance coverage for the Trust's XRP and limited legal recourse against service providers expose the Trust and shareholders to potential losses.
• The Trust may be required to terminate and liquidate at a disadvantageous time for shareholders, such as during depressed XRP prices.
• Shareholders have limited voting rights and restricted ability to bring derivative actions, requiring at least two unaffiliated shareholders holding 10% or more of outstanding shares.
• The treatment of the Trust for U.S. federal income tax purposes is uncertain, particularly regarding cash orders and abandonment of incidental rights, potentially leading to adverse tax consequences for shareholders.
• Competition from central bank digital currencies (CBDCs) and other payment initiatives could reduce demand for XRP.
• The significant holdings of XRP by Ripple Labs and other early stakeholders could have an adverse effect on the market price of XRP.
• Coinbase Global, as the Custodian and Prime Broker, also serves competing XRP products, potentially leading to conflicts of interest or resource allocation issues.

Future Outlook

The Trust intends to issue Shares on an ongoing basis and rely on an SEC exemption to operate a redemption program. It expects the arbitrage mechanism to keep the value of Shares closely linked to the Index Price, with net creations during premiums and net redemptions during discounts. The Sponsor may adjust creation/redemption order sizes to improve arbitrage efficiency. The Trust will continue to monitor for material hard forks or airdrops, but will irrevocably abandon any associated Incidental Rights or IR Virtual Currency. The Sponsor is committed to ensuring the Trust's status as a grantor trust for U.S. federal income tax purposes.

Management Comments

• The Trust's investment objective is for the value of the Shares (based on XRP per Share) to reflect the value of XRP held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities.
• While an investment in the Shares is not a direct investment in XRP, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to XRP.
• The Sponsor believes that the Index Provider's selection process for Constituent Trading Platforms and the Index Price algorithm provide a more accurate picture of XRP price movements than a simple average of Digital Asset Trading Platform spot prices.
• The Sponsor believes that it is generally more efficient, and therefore less costly, for spot commodity exchange-traded products to utilize in-kind orders rather than cash orders.
• The Sponsor believes that momentum pricing of XRP has resulted, and may continue to result, in speculation regarding future appreciation in the value of XRP, inflating and making the Index Price more volatile.

Industry Context

The filing highlights XRP's position as the fifth largest digital asset by market capitalization ($170.3 billion as of September 30, 2025), operating on a decentralized network focused on transactional utility and cross-border payments. It notes competition from other digital assets (Bitcoin, Ethereum, Stellar) and private blockchain platforms (e.g., J.P. Morgan's Onyx). The digital asset industry is characterized by extreme volatility, regulatory uncertainty (especially regarding XRP's security status), and increasing scrutiny from U.S. and foreign regulators. Recent U.S. government initiatives, such as President Trump's Executive Order on digital financial technology and the SEC's 'Project Crypto,' aim to establish clearer regulatory frameworks, which could significantly impact the market. The emergence of central bank digital currencies (CBDCs) also poses a competitive threat to XRP's role as a medium of exchange.

Comparison to Industry Standards

• Unlike traditional commodity-based trust shares (e.g., gold and silver ETPs) that typically employ in-kind creations and redemptions, the Trust currently only supports cash creations and redemptions, which is a novel and potentially less efficient approach for spot digital asset ETPs.
• The XRP Ledger, while decentralized, relies on a relatively small number of validators compared to networks like Bitcoin and Ethereum, potentially increasing vulnerability to malicious actors or Sybil attacks.
• The Trust's policy of irrevocably abandoning Incidental Rights and IR Virtual Currency (e.g., from forks or airdrops) contrasts with some direct digital asset holdings or other investment vehicles that might allow investors to benefit from such events.
• The Sponsor's fee of 2.5% is a competitive factor, and the Trust's ability to maintain scale and competitive positioning will be influenced by its fee structure relative to other spot XRP exchange-traded products, some of which have already received SEC approval.
• The use of Coinbase Custody Trust Company, LLC as a qualified custodian for XRP is consistent with industry best practices for institutional digital asset custody, though liability limits and the legal treatment of custodied digital assets in insolvency remain areas of uncertainty compared to traditional financial assets.

Management Changes

Corporate Governance

Legal Proceedings

• Osprey Funds, LLC v. Grayscale Investments, LLC: A lawsuit alleging violations of the Connecticut Unfair Trade Practices Act (CUTPA) was filed against the Sponsor. The Sponsor's motion for summary judgment was granted on February 7, 2025, and Osprey withdrew the action and appeal on May 12, 2025.
• Genesis Global Capital, LLC and Genesis Asia Pacific Pte. Ltd. v. Digital Currency Group, Inc. and affiliates: An ongoing complaint filed on May 19, 2025, in the U.S. Bankruptcy Court for the Southern District of New York, alleging preferential transfers. The Sponsor believes this lawsuit is without merit and intends to vigorously defend against it.

Related Party Transactions

• Digital Currency Group, Inc. (DCG), the indirect parent company of the Sponsor, holds a minority interest of less than 1.0% in Kraken, one of the Digital Asset Trading Platforms included in the Index.
• The Sponsor and its affiliates manage several other digital asset investment vehicles, potentially leading to conflicts of interest in resource allocation.
• Officers of the Sponsor may trade XRP for their personal accounts, subject to internal policies, which could create conflicts of interest with the Trust's positions.
• Grayscale Securities, LLC, an affiliate of the Sponsor, is the only Authorized Participant currently party to a participant agreement with the Trust.

Stakeholder Impact

• Shareholders: Gain exposure to XRP, but face limited voting rights, potential for shares to trade at premium/discount, and will not receive benefits from forks/airdrops. Tax implications from XRP sales for expenses.
• Authorized Participants: Facilitate creation/redemption of shares, benefit from arbitrage opportunities, but must comply with extensive regulatory requirements and face risks from the lack of in-kind transactions.
• Liquidity Providers: Facilitate cash orders for creations/redemptions, bearing price differentials in Variable Fee Cash Orders, and are unaffiliated third parties.
• Custodian (Coinbase Custody Trust Company, LLC): Responsible for safeguarding XRP, but liability is capped, and legal treatment of custodied digital assets in insolvency is uncertain.
• Sponsor (Grayscale Investments Sponsors, LLC): Manages the Trust, receives a 2.5% annual fee, and is responsible for most ordinary expenses, but faces potential conflicts of interest due to its broader business activities and affiliations.

Next Steps

• Listing of Shares on NYSE Arca under the symbol GXRP.
• Seeking 'In-Kind Regulatory Approval' from NYSE Arca and the SEC to permit in-kind creations and redemptions of Shares.
• Ongoing operation of the Trust, including continuous issuance of Shares via Cash Orders and, if approved, redemptions.
• Monitoring and adapting to evolving U.S. and international regulatory frameworks for digital assets.

Key Dates

Recommendation

The filing details the intent to list a spot XRP ETF on NYSE Arca, which is a positive development for market access and liquidity. The Trust has shown positive financial performance with an increase in net assets and XRP price appreciation. However, significant risks remain, including the current inability to conduct in-kind creations/redemptions, which could lead to substantial premiums or discounts, and the policy of abandoning benefits from forks/airdrops. The ongoing regulatory uncertainty surrounding XRP's classification as a security and potential conflicts of interest with related parties also warrant caution. A 'hold' recommendation is appropriate as investors should monitor these critical factors, particularly regulatory approvals for in-kind transactions and the resolution of XRP's security status, before making further investment decisions.

Keywords

XRP, Grayscale, ETF, Digital Asset, Cryptocurrency, NYSE Arca, SEC Filing, Spot XRP, Investment Trust, Blockchain, Coinbase Custody, Ripple Network, Financial Product