S-1: Grayscale XRP Trust S-1: Spot XRP ETF Listing Bid

Grayscale XRP Trust files S-1 registration for a spot XRP ETF on NYSE Arca, pending SEC approval, aiming to provide cost-effective XRP exposure.

Summary

• Grayscale XRP Trust, soon to be renamed Grayscale XRP Trust ETF, is a Delaware statutory trust established to hold XRP digital assets.
• The Trust's investment objective is for the value of its Shares to reflect the value of XRP held, less expenses and liabilities, benchmarked against the CoinDesk Ripple Price Index (XRX).
• Shares are intended to be listed on NYSE Arca under the symbol GXRP, providing investors with a market-traded and transparent investment vehicle.
• Currently, the Trust only supports 'Cash Orders' for the creation and redemption of Shares in blocks of 10,000, facilitated by Liquidity Providers.
• The ability to conduct 'in-kind' transactions (direct exchange of XRP for Shares) requires further regulatory approval, which has not yet been obtained.
• As of June 30, 2025, the Trust held 5,557,520 XRP with a fair value of $12,893,000.
• Net assets increased by 13% for the three months ended June 30, 2025, reaching $12,893,000, driven by XRP price appreciation from $2.09 to $2.32 per XRP.
• For the six months ended June 30, 2025, net assets increased by 23% from $10,450,000 (December 31, 2024) to $12,893,000.
• XRP's price ranged from $0.50 to $3.29 between September 5, 2024, and June 30, 2025, with a straight average of $1.89.
• As of August 21, 2025, XRP was the third largest digital asset by market capitalization, with an aggregate market value of $132.1 billion as of June 30, 2025.

Sentiment

Score: 6

Explanation: The filing presents a strong case for the Grayscale XRP Trust ETF, highlighting its structured approach, security measures, and the growing institutional interest in digital assets. Recent positive regulatory developments, such as the dismissal of SEC lawsuits against major crypto exchanges and the CFTC's classification of XRP as a non-security commodity, reduce some of the significant regulatory overhang. However, the critical SEC approval for the ETF's listing is still pending, and the inability to conduct in-kind creations/redemptions introduces operational inefficiencies and potential for premium/discount trading. The inherent volatility of XRP, concentrated ownership, and the Trust's policy of abandoning incidental rights (like airdrops) are notable drawbacks. The ongoing legal proceedings against DCG affiliates also add a layer of concern.

Positives

• The Trust offers a cost-effective and convenient way for investors to gain investment exposure to XRP without the complexities of direct digital asset acquisition and safekeeping.
• The expected listing on NYSE Arca under the symbol GXRP aims to provide a transparent and market-traded investment vehicle with an arbitrage mechanism designed to keep share value closely linked to the Index Price.
• Robust security procedures are in place for XRP custody, including cold storage, multiple encrypted private key shards, and geographical distribution of secure vaults, minimizing single points of failure.
• The Sponsor assumes most ordinary-course operational and periodic expenses of the Trust, reducing the direct cost burden on shareholders.
• Recent dismissals of SEC lawsuits against major digital asset trading platforms (Binance, Coinbase, Kraken) and the launch of the SEC's Crypto Task Force and Project Crypto indicate a potential move towards clearer regulatory frameworks for digital assets.
• The CFTC's determination that XRP is a non-security commodity and the launch of CME XRP futures products suggest growing institutional acceptance and regulatory clarity for XRP as a commodity.

Negatives

• The SEC's approval for the NYSE Arca listing of the Shares is still pending, with no guarantee of when or if such approval will be obtained.
• The Trust is currently unable to facilitate in-kind creations and redemptions, relying solely on cash orders, which may lead to operational inefficiencies and potential deviations between Share price and NAV.
• The Trust will irrevocably abandon any Incidental Rights or IR Virtual Currency (e.g., from forks or airdrops), meaning shareholders will not receive benefits from such events.
• The Sponsor's Fee, an annual rate of 2.5% of the NAV Fee Basis Amount, is paid in XRP, which will gradually decrease the amount of XRP represented by each Share over time.
• Shareholders do not have the regulatory protections associated with ownership of shares in a registered investment company under the Investment Company Act or a commodity pool under the CEA.
• Shareholders have limited voting rights, with almost all control vested in the Sponsor and Trustee, and derivative actions require a high threshold of 10.0% ownership by unaffiliated shareholders.
• Potential conflicts of interest exist due to the Sponsor's affiliates (DCG) having investments across the digital asset ecosystem, including a minority stake in Kraken, an Index constituent.
• The Custodian's maximum liability for losses is limited, potentially leaving significant losses of the Trust's XRP uninsured.
• The Trust may be forced to terminate and liquidate at a disadvantageous time if XRP is deemed a security or due to other adverse regulatory changes.
• XRP's value is highly volatile and subject to factors like manipulative trading, concentrated ownership (top 100 wallets hold ~85% of circulating supply), and competition from other digital assets or central bank digital currencies (CBDCs).
• The XRP Ledger relies on a relatively small number of validators, potentially increasing its vulnerability to malicious attacks like Sybil or eclipse attacks.
• The Trust is an emerging growth company, subject to reduced disclosure requirements, which may make the Shares less attractive to some investors.

Risks

• Extreme volatility of trading prices for digital assets, including XRP, could have a material adverse effect on the value of the Shares, potentially leading to a loss of all or substantially all of their value.
• The medium-to-long term value of the Shares is uncertain due to the nascent nature of digital assets and blockchain technologies, including their dependence on the internet, user adoption, and potential for malicious activity.
• The value of the Shares is dependent on the acceptance of digital assets, such as XRP, which represent a new and rapidly evolving industry.
• Digital assets may have concentrated ownership, and large sales or distributions by major holders could adversely affect the market price of XRP.
• Recent developments in the digital asset economy, including failures of prominent industry participants (e.g., FTX, Celsius), have led to extreme volatility, disruption, loss of confidence, and market-wide declines in liquidity.
• The largely unregulated nature and lack of transparency surrounding the operations of Digital Asset Trading Platforms may expose them to fraud, market manipulation, business failures, security failures, or operational problems, adversely affecting XRP value.
• The Shares may trade at a price that is at, above, or below the Trust's NAV per Share due to non-current trading hours between NYSE Arca and the 24-hour Digital Asset Trading Platform Market.
• A temporary or permanent fork or a clone of the XRP Network could adversely affect the value of the Shares or the Trust's ability to operate.
• The lack of active trading markets for the Shares may result in losses on investors' investments at the time of disposition.
• Possible illiquid markets for XRP may exacerbate losses or increase the variability between the Trust's NAV and its market price.
• The liquidity of the Shares may be affected if Authorized Participants cease to perform their obligations or the Liquidity Engager is unable to engage Liquidity Providers.
• A determination that XRP or any other digital asset is a security may adversely affect the value of XRP and the Shares, potentially leading to extraordinary expenses or termination of the Trust.
• Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of the Shares or restrict the use of XRP, validating activity, or the operation of the XRP Network.
• Changes in the policies of the U.S. Securities and Exchange Commission (SEC) could adversely impact the value of the Shares.
• Regulatory changes or other events in foreign jurisdictions may affect the value of the Shares or restrict the use of digital assets.
• An Authorized Participant, the Trust, or the Sponsor could be subject to regulation as a money service business or money transmitter, resulting in extraordinary expenses and decreased liquidity for the Shares.
• Regulatory changes or interpretations could obligate the Trust or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust, as the Sponsor has limited fiduciary duties beyond the Trust Agreement.
• The Sponsor's continued services are not assured, and discontinuance without a suitable replacement could be detrimental to the Trust.
• The lack of ability to facilitate in-kind creations and redemptions of Shares could have adverse consequences for the Trust, including impaired liquidity and wider bid/ask spreads.
• If the Custodian resigns or is removed without replacement, it could trigger early termination of the Trust.
• The Trust relies on third-party service providers, and the replacement of such providers could pose challenges to the safekeeping of XRP and Trust operations.
• XRP transactions are irrevocable, and stolen or incorrectly transferred XRP may be irretrievable, adversely affecting the value of the Shares.
• The lack of full insurance and shareholders' limited rights of legal recourse against the Trust and its service providers expose the Trust and its shareholders to the risk of loss of XRP.
• The Trust may be required, or the Sponsor may deem it appropriate, to terminate and liquidate at a time that is disadvantageous to shareholders.
• Extraordinary expenses resulting from unanticipated events, not covered by the Sponsor, may become payable by the Trust, adversely affecting the value of the Shares.
• The Trust's delivery or sale of XRP to pay expenses could result in shareholders incurring tax liability without an associated distribution from the Trust.
• Intellectual property rights claims may adversely affect the Trust and the value of the Shares.
• Pandemics, epidemics, and other natural and man-made disasters could negatively impact the value of the Trust's holdings and/or significantly disrupt its affairs.
• The inability of Authorized Participants and market makers to hedge their XRP exposure may adversely affect the liquidity of Shares and their value.
• Arbitrage transactions intended to keep the price of the Shares closely linked to the price of XRP may be problematic if creation and redemption processes encounter difficulties.
• The significant holdings of XRP by Ripple Labs and other early stakeholders could have an adverse effect on the market price of XRP.
• Competition from certain Ripple Labs solutions that do not require XRP to function, as well as from consortia or private blockchains, could negatively impact XRP price.
• Future sales of XRP by Jed McCaleb, a co-founder of Ripple Labs, or the perception of such sales, could cause the price of XRP to decline.
• The treatment of the Trust for U.S. federal income tax purposes is uncertain, particularly regarding grantor trust status and the tax consequences of Incidental Rights and IR Virtual Currency.
• Future developments regarding the treatment of digital assets for U.S. federal income tax purposes could adversely affect the value of the Shares.
• A U.S. tax-exempt shareholder may recognize unrelated business taxable income as a consequence of an investment in Shares.
• Non-U.S. Holders may be subject to U.S. federal withholding tax on income derived from forks, airdrops, and similar occurrences.

Future Outlook

The Trust intends to issue Shares on an ongoing basis and list them on NYSE Arca under GXRP, relying on an SEC exemption for a redemption program. The Sponsor expects a net creation of Shares if they trade at a premium to NAV and a net redemption if they trade at a discount, indicating an effective arbitrage mechanism. The SEC has launched a Crypto Task Force and Project Crypto to develop a comprehensive and clear regulatory framework for digital assets, which may resolve ongoing legal uncertainties and potentially facilitate broader digital asset market participation.

Management Comments

• The Sponsor believes that the Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended (the CEA), as administered by the Commodity Futures Trading Commission (the CFTC) and that neither the Sponsor nor the Trustee is subject to regulation by the CFTC as a commodity pool operator or a commodity trading advisor.
• The Sponsor believes that the security procedures in place for the Trust, including, but not limited to, offline storage, or cold storage, for a substantial portion of the Trusts XRP, multiple encrypted private key shards, usernames, passwords and 2-step verification, are reasonably designed to safeguard the Trusts XRP.
• 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, because there are fewer steps in the process and therefore there is less operational risk involved when an Authorized Participant can manage the buying and selling of the underlying asset itself, rather than depend on an unaffiliated party such as the issuer or sponsor of the exchange-traded product.
• The Sponsor believes that the SEC is unlikely to approve a request to list the shares of a spot exchange-traded product that holds a digital asset that the SEC believes is an unregistered security.
• The Sponsor believes that the Index Providers selection process for Constituent Trading Platforms as well as the methodology of the Index Prices algorithm provides a more accurate picture of XRP price movements than a simple average of Digital Asset Trading Platform spot prices, and that the weighting of XRP prices on the Constituent Trading Platforms limits the inclusion of data that is influenced by temporary price dislocations that may result from technical problems, limited liquidity or fraudulent activity elsewhere in the XRP spot market.
• The Sponsor has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Trading Platforms individually or as a group.
• The Sponsor does not expect the foregoing proceedings to have a material adverse effect on the Trusts business, financial condition or results of operations.

Industry Context

The filing highlights the dynamic and evolving regulatory landscape for digital assets in the U.S. and globally. The SEC and CFTC are actively working on developing regulatory frameworks, with recent dismissals of lawsuits against major crypto exchanges (Binance, Coinbase, Kraken) and the launch of dedicated crypto task forces signaling a potential shift towards clearer guidelines. The approval of spot Bitcoin and Ether ETFs has set a precedent, but the path for other digital assets like XRP remains uncertain, despite a favorable court ruling regarding XRP's security status. The digital asset market has experienced significant volatility and disruption, including major platform failures, increasing the need for robust regulatory oversight and investor protection. The emergence of central bank digital currencies (CBDCs) and private blockchain initiatives by financial institutions also poses a competitive threat to XRP's role in transactional utility.

Comparison to Industry Standards

• XRP is the third largest digital asset by market capitalization, indicating its significant standing within the broader cryptocurrency market, though still smaller than Bitcoin and Ethereum.
• The XRP Network's primary function is transactional utility, differentiating it from Bitcoin, which is often seen as a store of value.
• Unlike Bitcoin, all 100 billion XRP tokens were created at launch, rather than through a progressive mining process, which impacts its supply dynamics.
• The XRP Ledger relies on a relatively small number of validators (Ripple Labs runs 1 of 35 in the default Trusted Nodes List) compared to more decentralized networks like Bitcoin and Ethereum, potentially exposing it to additional vulnerabilities.
• The Trust's current reliance on cash-only creation and redemption orders is a novel approach for spot commodity exchange-traded products, which typically utilize in-kind transactions, potentially leading to less efficient arbitrage and wider price deviations.
• Coinbase Global, the Custodian and Prime Broker for the Trust, also serves several competing exchange-traded XRP products, indicating a concentration of critical service providers in the digital asset ETP ecosystem.
• The SEC's recent approvals of spot Bitcoin and Ether ETPs provide a benchmark for regulatory acceptance, but XRP's specific security status remains under scrutiny, despite a District Court ruling that XRP itself is not a security, but certain sales were investment contracts.

Management Changes

Corporate Governance

Legal Proceedings

• Osprey Funds, LLC filed a lawsuit against the Sponsor alleging violations of the Connecticut Unfair Trade Practices Act (CUTPA) related to Grayscale Bitcoin Trust ETF advertising. 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. filed a complaint in the U.S. Bankruptcy Court against Digital Currency Group, Inc. (DCG) and certain affiliates, including Grayscale Operating, LLC (GSO), alleging preferential transfers. GSO believes the lawsuit is without merit and intends to vigorously defend against it.
• The SEC filed a complaint against Ripple Labs, Inc. in 2020, alleging unregistered XRP sales. In July 2023, the District Court for the Southern District of New York held that while XRP is not a security, certain sales to specific buyers were investment contracts. A final judgment was entered on August 7, 2024, and appeals were dismissed on August 7, 2025.
• The SEC brought charges against Binance, Coinbase, and Kraken in June and November 2023, respectively, alleging operation of unregistered securities exchanges. Joint stipulations to dismiss each of these complaints were entered between February 2025 and May 2025.
• In September 2024, the SEC filed a settled enforcement action against Mango Labs, LLC, Mango DAO, and Blockworks Foundation (the Mango Enforcement Action), describing XRP as an example of a crypto asset offered and sold as a security.
• In October 2024, the SEC filed an enforcement action against Cumberland DRW, LLC (the Cumberland Enforcement Action), also describing XRP as an example of a crypto asset offered and sold as a security. A joint request to dismiss this action was approved in March 2025.
• A co-founder of Tornado Cash was convicted in August 2025 of conspiracy to operate an unlicensed money transmitting business, with a mistrial declared on charges of conspiracy to commit money laundering and conspiracy to violate U.S. sanctions.

Related Party Transactions

• Digital Currency Group, Inc. (DCG), the sole equity holder and 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, including Grayscale Securities, LLC (the sole Authorized Participant as of the filing date), may have conflicts of interest in allocating resources among different clients and business ventures.
• Officers of the Sponsor may trade XRP for their personal accounts, potentially taking positions opposite to those of the Trust, subject to internal trading policies.
• The Sponsor has historically selected, and may again select, an Index Provider that is an affiliate (CoinDesk Indices, Inc. was an affiliate until November 20, 2023).

Stakeholder Impact

• **Shareholders**: Will gain exposure to XRP through a regulated product but face risks from price volatility, regulatory uncertainty, and the Trust's policy of abandoning incidental rights (e.g., airdrops). They also bear the cost of extraordinary expenses and potential tax liabilities without direct distributions.
• **Authorized Participants**: Will facilitate the creation and redemption of Shares, subject to regulatory requirements and market conditions. They may face competition from other ETPs and operational challenges due to the cash-only creation/redemption mechanism.
• **Sponsor (Grayscale Investments Sponsors, LLC)**: Manages the Trust, receives the Sponsors Fee, and covers most ordinary expenses. It faces potential conflicts of interest due to its affiliates' broader digital asset investments and market activities.
• **Custodian (Coinbase Custody Trust Company, LLC) & Prime Broker (Coinbase, Inc.)**: Provide essential safekeeping and transaction services. Their operational stability and solvency are critical to the Trust's assets, with limited liability for certain losses.
• **Liquidity Providers**: Facilitate cash orders for creations and redemptions, bearing price differentials in Variable Fee Cash Orders, and are crucial for the arbitrage mechanism.
• **Regulators (SEC, CFTC)**: Their ongoing actions and evolving frameworks significantly influence the Trust's operations, XRP's market status, and the broader digital asset industry.

Next Steps

• Seek effectiveness of the S-1 registration statement after SEC approval of the 19b-4 application.
• Rename the Trust to Grayscale XRP Trust ETF upon effectiveness of registration and listing on NYSE Arca.
• NYSE Arca may seek In-Kind Regulatory Approval to permit the Trust to create and redeem Shares via in-kind transactions.
• The SEC's Crypto Task Force and Project Crypto will continue developing a comprehensive regulatory framework for digital assets.
• The CFTC will launch an initiative for trading spot crypto asset contracts on CFTC-registered futures exchanges.
• The Sponsor will continue to monitor for material hard forks or airdrops and notify investors of any material changes to its policy.
• The Sponsor will publish the Trust's NAV and NAV per Share daily on its website.

Key Dates

Recommendation

The Grayscale XRP Trust ETF offers a structured way to gain exposure to XRP, benefiting from professional management and robust custody solutions. Recent positive regulatory developments, such as the dismissal of SEC lawsuits against major exchanges and the CFTC's classification of XRP as a non-security commodity, reduce some of the significant regulatory overhang. However, the critical SEC approval for the ETF's listing is still pending, and the inability to conduct in-kind creations/redemptions introduces inefficiencies that could lead to price deviations from NAV. The inherent volatility of XRP, concentrated ownership, and the Trust's policy of abandoning incidental rights (like airdrops) are notable drawbacks. Investors should hold existing positions and await further clarity on the SEC listing approval and the long-term regulatory environment for XRP before making significant new investments. The potential for future regulatory changes or market disruptions remains a key concern.

Keywords

Grayscale, XRP, ETF, Spot XRP, Digital Asset, Cryptocurrency, NYSE Arca, SEC Filing, S-1, Investment Trust, Blockchain, Ripple, GXRP, Crypto ETF, Asset Management, Financial Product