Can XRP held with an institutional custodian be put to work in DeFi?

The full answer

What happens to XRP held by the spot ETFs?

In the most recent filings covered here (the quarter ended June 30, 2026 for the Canary trust, the 21Shares trust and the fund filing under the ef20077164 10-Q, and the quarter ended March 31, 2026 for the Bitwise trust), each fund’s XRP is held with its custodians.

Canary XRP ETF held 231,279,303 XRP on June 30, 2026, according to its Form 10-Q [1]. Coinbase Custody Trust and BitGo Trust are its custodians and are responsible for safekeeping all of the trust’s XRP [1]. The filing calls the trust a passive investment vehicle that does not seek to generate returns beyond tracking the price of XRP [1].

Franklin XRP ETF’s custodian, Coinbase Custody, held 225,368,820.7314 XRP for the fund on June 30, 2026 [2]. The Franklin filing calls the fund a passive investment vehicle and says the sponsor does not actively manage the XRP it holds [2].

The 21Shares XRP ETF uses the same terms in its Form 10-Q for the quarter to June 30, 2026: it holds XRP at its custodians, it is a passive investment vehicle, and its sponsor does not actively manage the XRP [3].

Bitwise XRP ETF held 194,904,778 XRP on March 31, 2026, according to its Form 10-Q [4]. Coinbase Custody Trust serves as its custodian for XRP where qualified custody is available [4]. The trust receives XRP only through creation orders and does not itself transact on any digital asset markets [4]. The question of whether this XRP could ever be used is covered in Does XRP held by ETFs just sit idle?.

Which custodied XRP holder plans to put its XRP to work?

Evernorth held an XRP position of more than 473 million tokens at the end of 2025, Crowdfund Insider reported in September 2026 [5]. Ripple Labs is its sole stockholder today [5]. After its merger with Armada Acquisition Corp. II, Crowdfund Insider wrote, Evernorth will operate as a public company whose strategy centers on accumulating XRP and putting it to work on the XRP Ledger [5]. Management has described the goal as increasing XRP per share over time through treasury management and ecosystem participation, according to the same report [5].

Evernorth also agreed to issue $30 million of 4.00% convertible senior payment-in-kind notes due 2031, disclosed in a Form 8-K filed on September 17, 2026, with proceeds for purposes that include buying XRP and supporting activity in the XRP ecosystem [5]. The notes will only be issued if the merger closes, which management expects in the fourth quarter of 2026 [5]. The plan in detail is covered in What is Evernorth doing with its XRP, and how does it plan to earn yield?.

How much custodied XRP has been converted to FXRP through Hex Trust?

How FXRP is created, and what backs it, is explained in What is FXRP, and how much of it is actually being used?.

What cuts against the idea that custodied XRP is being put to work?

The strongest evidence against it comes from the custodians’ largest disclosed clients. Three US spot XRP ETFs describe themselves in their own 2026 filings as passive investment vehicles. The 21Shares sponsor says it does not actively manage the XRP held by the Trust, and the filing for another fund says the same of its sponsor [2][3]. A third trust’s filing says it is a passive investment vehicle that does not seek to generate returns beyond tracking the price of XRP [1]. The one holder in these sources with a deployment plan, Evernorth, has not yet completed the merger that plan depends on. Crowdfund Insider reported that if Armada shareholders reject the deal or other closing conditions fail, the notes are never issued [5]. Whether the notes are issued depends on the merger closing, which the Crowdfund Insider report says management expects in the fourth quarter of 2026 [5]. The result of the Armada shareholder vote is not in the project’s sources. The risks that apply once XRP is wrapped or placed in pools are set out in What are the risks of earning yield on XRP through AMM pools or wrapped XRP?.

Does Ripple’s own custody business offer a similar path?

Ripple’s custody product and the banks that use it are covered in What is Ripple Custody, and which banks use it?. This page’s sources do not describe a DeFi route through Ripple Custody.

How do institutions meet compliance needs on the ledger?

Controls an institution may need before moving custodied assets on-chain, such as authorised accounts and freezes, are covered in What compliance features does the XRP Ledger offer institutions?.