21Shares XRP ETF 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This information should be read in conjunction with the financial statements and notes included in Item 15 of Part IV of this annual report on Form 10-K (this “Form 10-K”). This Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and such forward-looking statements involve risks and uncertainties. All statements (other than statements of historical fact) included in this Form 10-K that address activities, events or developments that may occur in the future, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Trust performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws. Organization and Trust Overview The Trust is a Delaware statutory trust, formed on June 3, 2024 pursuant to the Delaware Statutory Trust Act (“DSTA”). The Trust operates pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”). CSC Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust (the “Trustee”). The Trust is managed and controlled by the Sponsor. The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary of 21co Holdings Limited (formerly known as Amun Holdings Limited). The ultimate parent company of 21co Holdings Limited is FalconX. The Sponsor is not subject to regulation by the CFTC as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect to the Trust. The Trust is an exchange-traded fund that issues units of beneficial interest representing fractional undivided beneficial interests in its net assets that trade on the Exchange. The Shares are listed for trading on the Exchange under the ticker symbol “TOXR”. 63 Ripple Markets Inc., a corporation incorporated and existing under the laws of Delaware served as the “Seed Capital Investor” to the Trust. On December 20, 2024, the Sponsor, in its capacity as Seed Capital Investor, subject to certain conditions, purchased 10,000,000 Shares at a per-Share price of $22.07 (the “Initial Seed Shares”). Total proceeds to the Trust from the sale of the Initial Seed Shares were $220,676,000. Delivery of the Initial Seed Shares was made on December 20, 2024. On December 10, 2025 (the “Seed Capital Purchase Date”), the Sponsor, in its capacity as Initial Seed Creation Investor, purchased the initial Seed Creation Baskets comprising 20,000 shares (the “Initial Seed Creation Baskets”) at a price of $20.33 per share. In its capacity as the Seed Capital Investor, 21Shares US LLC has acted as a statutory underwriter in connection with this purchase. The total proceeds to the Trust from the sale of the Initial Seed Creation Baskets were $406,600. On December 10, 2025, the Trust purchased XRP with the proceeds of the Initial Seed Creation Baskets by transacting with an XRP Counterparty to acquire XRP on behalf of the Trust in exchange for cash provided by 21Shares US LLC in its capacity as Seed Capital Investor. All XRP acquired in connection with the Initial Seed Creation Baskets is held by the XRP Custodians. The Trust’s investment objective is to seek to track the performance of XRP, as measured by the performance of the CME CF XRP—Dollar Reference Rate — New York Variant (XRPUSD_NY) (the “Pricing Benchmark”), as adjusted for the Trust’s expenses and other liabilities. The Pricing Benchmark is calculated by CF Benchmarks Ltd. (the “Benchmark Provider”) based on an aggregation of executed trade flow of major XRP trading platforms (“Constituent Exchanges”). CF Benchmarks Ltd. is the administrator for the Pricing Benchmark (the “Pricing Benchmark Provider”). The Pricing Benchmark is designed to track the performance of XRP in U.S. dollars. In seeking to achieve its investment objective, the Trust will hold XRP and will value its Shares daily based on the Pricing Benchmark. 21Shares US LLC is the sponsor of the Trust, CSC Delaware Trust Company (the “Trustee”) is the trustee of the Trust, and Coinbase Custody Trust Company, LLC (the “Coinbase Custodian”), Anchorage Digital Bank N.A. (the “Anchorage Custodian”) and BitGo Bank & Trust Company, N.A. (the “BitGo Custodian” and together with the Coinbase Custodian and the Anchorage Custodian, the “XRP Custodians”) are the XRP Custodians for the Trust and will hold all of the Trust’s XRP on the Trust’s behalf (the custodial services agreements with each of the XRP Custodians are collectively referred to herein as the “Custodial Services Agreements”). The Trust is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the XRP held by the Trust. The Trust issues Shares only in Creation Baskets of 10,000 or multiples thereof. Creation Baskets are issued and redeemed in exchange for cash or XRP. Individual Shares will not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “TOXR”. The Trust issues Shares in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date. The Trust pays the unitary Sponsor Fee of 0.30% of the Trust’s XRP NAV. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Administrator calculates the Sponsor Fee on a daily basis by applying a 0.30% annualized rate to the Trust’s NAV, and the amount of XRP payable in respect of each daily accrual is determined by reference to the Pricing Benchmark. The Trust is an “emerging growth company” as that term is used in the Securities Act of 1933, as amended (the “Securities Act”), and, as such, the Trust may elect to comply with certain reduced public company reporting requirements. The NAV of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets. The NAV is calculated on each Business Day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Pricing Benchmark price. In determining the NAV of the Trust on any Business Day, the Administrator will calculate the price of the XRP held by the Trust as of 4:00 p.m. ET on such day. The Administrator will also calculate the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares. In addition to calculating NAV and NAV per Share, for purposes of the Trust’s financial statements, the Trust determines the Principal Market NAV and Principal Market NAV per Share on each valuation date for such financial statements. The determination of the Principal Market NAV and Principal Market NAV per Share is identical to the calculation of NAV and NAV per Share, respectively, except that the value of XRP is determined using the fair value of XRP based on the price in the XRP market that the Trust considers its “principal market” as of 4:00 p.m. ET on the valuation date, rather than using the Pricing Benchmark. NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market and Principal Market NAV per Share, respectively. 64 Critical Accounting Estimates The financial statements and accompanying notes are prepared in accordance with GAAP. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. Below is a summary of accounting policies on cash and investment valuation. There were no material estimates involving a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on the Trust’s financial condition used in the preparation of the financial statements. In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies. Cash Cash includes non-interest bearing, non-restricted cash maintained with one financial institution that does not exceed U.S. federally insured limits. Investment Valuation The Trust’s policy is to value investments held at fair value. The Trust follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 determines fair value to be the price that would be received for XRP in a current sale, which assumes an exit price resulting from an orderly transaction between market participants on the measurement date. ASC 820-10 requires the assumption that XRP is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market). The Trust utilizes an exchange traded price from the Trust’s principal market for XRP as of 4:00 p.m. ET on the Trust’s financial statement measurement date. Results of Operations For the Year Ended December 31, 2025 The Trust’s net asset value increased to $247,658,271 on December 31, 2025, primarily from a decrease in price of XRP and a net increase in the number of shares outstanding of 3,890,000 from December 31, 2024 to December 31, 2025. Net realized and change in unrealized loss on investment in XRP for the year ended December 31, 2025 was ($30,086,452) which includes a net change in unrealized depreciation on investment in XRP of ($30,852,730), net change in unrealized appreciation on Sponsor Fee payable of 1,197, and a realized gain of $765,081. Net unrealized loss on investment in XRP for the period was driven by XRP price depreciation throughout the year to $1.83 per XRP as of December 31, 2025. Net decrease in net assets resulting from operations was $36,024,919 for the year ended December 31, 2025, which consisted of a net increase in the number of shares outstanding, accompanied by the aforementioned net realized gain and change in unrealized depreciation on investment in XRP. For the Period from December 20, 2024 (commencement of operations) through December 31, 2024 The Trust’s net asset value increased to $209,352,190 on December 31, 2024, primarily from an decrease in price of XRP and a net increase in the number of shares outstanding of 10,000,000 from December 20, 2024 to December 31, 2024. Net change in unrealized loss on investment in XRP for the period ended December 31, 2024 was $11,160,614. Net change in unrealized loss on investment in XRP for the period was driven by XRP price depreciation throughout the period to $2.10 per XRP as of December 31, 2024. Net decrease in net assets resulting from operations was ($11,323,810) for the period ended December 31, 2024, which consisted of a net increase in the number of shares outstanding, accompanied by the aforementioned net change in unrealized loss on investment in XRP. Liquidity and Capital Resources The Trust is not aware of any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs. The Trust’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.30% of the Trust’s total XRP holdings. In exchange for the Sponsor Fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not limited to the following: fees charged by Administrator, the Custodians, Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses. The Sponsor bears expenses in connection with the Trust’s organization and initial offering costs. 65 The Sponsor is not required to pay any extraordinary or non-routine expenses. Extraordinary expenses are fees and expenses which are unexpected or unusual in nature, such as legal claims and liabilities and litigation costs or indemnification or other unanticipated expenses. Extraordinary fees and expenses also include material expenses which are not currently anticipated obligations of the Trust. The Trust will be responsible for the payment of such expenses to the extent any such expenses are incurred. Routine operational, administrative, and other ordinary expenses are not deemed extraordinary expenses. The Trust will sell XRP on an as-needed basis to pay the Sponsor Fee. Off-Balance Sheet Arrangements The Trust does not have any off-balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosures about Market Risks We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.