Franklin XRP Trust

Franklin XRP Trust

Overview

• The Franklin XRP Trust is a Delaware statutory trust that offers a single ETF-like fund, the Franklin XRP ETF (the Fund).
• The Fund trades on NYSE Arca under the ticker XRPZ and issues Shares representing fractional undivided interests.
• The Fund is a passive, non-leveraged vehicle that provides exposure to XRP through a securities market vehicle rather than by direct ownership of XRP by investors.

Fund objective and valuation

• Investment objective: Track the price of XRP before the Fund’s expenses and liabilities.
• NAV determination: Net asset value (NAV) is calculated by the Administrator based on the Fund’s XRP holdings valued using the CF Benchmarks Index. If the CF Benchmarks Index is unavailable or deemed unreliable, the Sponsor may fair-value the holdings.
• CF Benchmarks Index: Aggregates XRP trading across major spot platforms (Bitstamp, Coinbase, Kraken, LMAX Digital, Crypto.com) using a volume-weighted median within a 3:00–4:00 p.m. ET observation window. Operated by CF Benchmarks Ltd., a UK FCA-regulated firm, and registered under the UK BMR.

Structure

• Trust form: Delaware statutory trust; the Fund is a series within the Trust. The Trust provides inter-series limitation on liability so the Fund’s debts are payable only from its own assets.
• Regulatory status: The Trust is not an investment company under the Investment Company Act and the Fund is not a commodity pool under the CEA.
• Tax treatment: The Sponsor expects the Fund to be treated as a grantor trust for U.S. federal income tax purposes, with income flowing through to beneficial owners of Shares.
• Creation units: 50,000 Shares per Creation Unit. Creation and redemption can be processed in cash or in-kind (with XRP), subject to a 2:00 p.m. ET cutoff; settlement is typically T+1 business day.

Holdings and custody

• Primary holdings: XRP and cash.
• Custody arrangement: XRP holdings are held in a Vault Balance (cold storage) by Coinbase Custody Trust Company, LLC. A Trading Balance is maintained with the Prime Broker (Coinbase, Inc.) for creation/redemption activity and other cash needs.
• Trading Balance treatment: The Trading Balance is an omnibus claim against the Prime Broker’s XRP and cash for customers with similar entitlements and is not a segregated account for the Fund.
• Key operational detail: Cold storage is used for private keys; a portion of XRP may be held temporarily in the Trading Balance to facilitate transactions.

Key service providers and counterparties

• Sponsor: Franklin Holdings, LLC (ultimate parent: Franklin Resources, Inc.)
• Administrator and accounting: The Bank of New York Mellon (BNY Mellon asset servicing)
• Transfer agent: The Bank of New York Mellon (BNY Mellon)
• XRP Custodian: Coinbase Custody Trust Company, LLC
• Prime Broker: Coinbase, Inc. (affiliate of the XRP Custodian)
• Marketing agent: Franklin Distributors, LLC (affiliate of the Sponsor)
• Authorized Participants (as of 3/31/2026): Virtu Americas LLC; Jane Street Capital, LLC
• XRP trading counterparties: Jane Street and Virtu Financial Singapore (and others under Master Purchase and Sale Agreements may be added)

Liquidity and creation/redemption mechanics

• Creation/redemption methods: Authorized Participants may create or redeem Creation Units for cash or in-kind XRP; cash substitutions are possible.
• Cash creations/redemptions: Typically involve XRP purchases or sales via XRP Trading Counterparties or the Prime Broker; settlements are typically T+1.
• In-kind creations/redemptions: XRP is delivered to or from the Fund’s accounts; corresponding XRP amounts are determined by the Creation Unit Deposit Amount and Creation XRP Amount.
• Trade credits and financing: The Fund may borrow trade credits from a Trade Credit Lender to facilitate on-trade-date purchases or redemptions; financing fees are paid by the applicable party.
• Operational disruptions: Settlement can be delayed by Prime Broker or Custodian outages, XRP Ledger delays, or other operational issues; Shares are not issued or redeemed until required XRP/cash is received.
• Pricing adjustments: The Sponsor determines the XRP deposit amount for in-kind activity and may adjust daily to reflect XRP movements and accrued expenses.
• Liquidity considerations: Concentration among Authorized Participants and reliance on a limited set of XRP Trading Counterparties can affect market liquidity and contribute to premiums or discounts to NAV.

Costs and Sponsor economics

• Sponsor’s Fee: 0.19% per year of the Fund’s daily NAV, accrued daily and paid quarterly.
• Fee waivers and expense support: The Sponsor has waived the Sponsor’s Fee for certain periods, including a waiver through May 31, 2026 on the first $5.0 billion of Fund assets, and covers many ordinary expenses (Administrator, Marketing Agent, Custodians, SEC filings, audits, etc.) up to specified limits.
• Fund-funded expenses: The Fund may sell XRP to pay the Sponsor’s Fee and expenses not assumed by the Sponsor; such sales reduce XRP per Share and can reduce NAV per Share. Extraordinary (non-ordinary) expenses may be borne by the Fund unless assumed by the Sponsor.

Shareholder rights and governance

• Voting rights: Shareholders have no voting rights except as may be granted at the Sponsor’s sole discretion.
• Derivative actions: A 10% ownership threshold applies to compel derivative suits under Delaware provisions; otherwise derivative actions are restricted.
• Amendments: The Sponsor may amend the Declaration of Trust without shareholder consent; material amendments are disclosed via prospectus supplement.
• Litigation forum: Delaware courts and U.S. federal courts in Wilmington, DE are designated as non-exclusive forums for most claims; Securities Act claims must be brought in U.S. federal courts (exclusive forum).
• NAV authority: The Sponsor has the authority to determine NAV; the Administrator computes NAV using the Sponsor-selected pricing source and the Sponsor may adopt alternate fair value methods if necessary.

Regulatory and risk considerations

• Market risk: XRP is a highly volatile digital asset; the Fund is passive and not managed to mitigate that volatility.
• Regulatory uncertainty: U.S. and foreign regulatory actions and rulemaking affecting digital assets (money transmitter status, securities vs. commodities, sanctions, AML/KYC, stablecoins, CBDCs, etc.) could materially affect XRP, the Fund, and Sponsor operations.
• Securities status: There is ongoing debate about whether XRP is a security; enforcement actions and regulatory developments could affect XRP trading, custody, and use, and could affect the Fund’s operations or result in liquidation.
• Counterparty and platform risk: The Fund depends on the XRP Custodian, Prime Broker, Authorized Participants, and XRP Trading Counterparties; insolvency, operational failure, or regulatory action affecting these parties could disrupt creation/redemption, custody, or trading.
• Insurance and liability: The Fund relies on insurance maintained by Coinbase Global (parent of the XRP Custodian and Prime Broker) and contractually defined limits on liability; these do not guarantee coverage for all losses.
• Concentration and operational risk: The Fund holds only XRP and cash, increasing exposure to XRP price movements. Operations depend on the XRP Ledger and third-party systems; outages or security incidents could affect NAV and liquidity.

Key numbers and disclosures

• Creation Unit size: 50,000 Shares.
• Authorized Participants (as of 3/31/2026): Virtu Americas LLC; Jane Street Capital, LLC.
• Trust staffing: The Trust itself has no officers, directors, or employees.
• Governance: The Sponsor retains broad discretion over NAV calculation, valuation methodologies, and certain amendments.

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