Does XRP held by ETFs just sit idle?

The full answer

What do the funds’ own filings say they do with their XRP?

They hold it and do little else. Canary’s quarterly report for the period ended June 30, 2026 calls its XRP ETF a passive investment vehicle that does not seek returns beyond tracking the price of XRP [1]. Franklin’s report for the same quarter says its sponsor does not actively manage the fund’s XRP. Bitcoin.com reported on September 9, 2026 that Schwab’s money fund lends cash short-term and the borrowing broker-dealer posts a basket of securities as security, with XRP ETF shares turning up inside those baskets [2].

The Bitwise and Grayscale trusts describe the same posture in their filings for the quarter ended March 31, 2026. Each trust receives XRP only in connection with a creation order from an authorized participant, and neither transacts on any digital asset market itself [3][4].

The coins sit with the funds’ custodians. Coinbase Custody keeps segregated accounts for the Bitwise trust’s XRP [3] and is the XRP custodian for Franklin’s fund [2]. Canary splits safekeeping between Coinbase Custody and BitGo [1]. On June 30, 2026, Canary held 231,279,303 XRP [1] and Franklin’s custodian held about 225.4 million XRP for its fund [2].

Do the funds’ governing documents allow lending XRP, and what would change that?

The passages above set narrow mandates: track the price, hold the coins, handle creations, redemptions and fees. Franklin’s wording goes furthest, ruling out derivatives and “similar instruments or transactions” [2]. Read together, these terms leave no visible room for a fund to lend its XRP. That reading is an interpretation of the filings, not a quoted ban; the reasoning is set out below.

Fees are the one routine outflow the trusts control. Bitwise charges a sponsor fee of 0.34% a year of its XRP holdings, and in the first quarter of 2026 it paid about 113,045 XRP out of the trust to cover it [3].

Have bitcoin or ether ETFs gained approval to lend or stake holdings, as a precedent?

The cited filings are quarterly reports of individual XRP funds, and the passages quoted concern those XRP funds [1][2][3][4]. Bitcoin.com’s September 9, 2026 report covers XRP ETF shares appearing as repo collateral in Schwab money-fund filings [5].

How does XRP move in and out of the funds?

Through share creations and redemptions, which take place between the funds and authorized participants rather than retail buyers, CryptoSlate explained in September 2026 [5]. Orders can be settled in XRP or in cash [1][3]. In an in-kind order, the participant or its designee hands XRP straight to the trust or takes it straight back [3]. In a cash creation at Canary, the participant deposits cash with the fund’s cash custodian [1]. Bitwise’s filing says its additions are mainly XRP bought for creations plus in-kind deposits, and its disposals are XRP sold for redemptions [3]. Franklin’s sponsor arranges the sale of the XRP behind a cash redemption [2]. The step-by-step mechanics are covered in how XRP ETF creations and redemptions work.

The volumes are large. Bitwise added about 76.2 million XRP for creations and paid out about 12.4 million for redemptions in the three months to March 31, 2026, ending the quarter with 194,904,778 XRP [3]. Grayscale’s trust moved the other way that quarter. About 102.8 million XRP left for redemptions against 26.4 million contributed, and its holdings fell from about 122.2 million to 45.8 million XRP [4]. Franklin issued 6,050,000 shares for about 65.7 million XRP in the second quarter and redeemed none [2]. Canary’s 10-Q reports 34,132,840 XRP purchased, 25,933,548 XRP contributed in kind and 3,933,000 XRP sold for redemptions in the six months ended 30 June 2026 [1]. Canary’s 10-Q reports 34,132,840 XRP purchased, 25,933,548 XRP contributed in kind for the creation of shares and 3,933,000 XRP sold for the redemption of shares in the six months ended June 30, 2026 [1].

Across the five main funds, CryptoSlate counted about $629.9 million of creations and $309.1 million of redemptions in the first half of 2026. On June 30 the five held about 906.8 million XRP, it reported [5]. Fund-by-fund balances over time are tracked in how much XRP the US spot ETFs hold.

Franklin’s 10-Q reports 6,050,000 shares issued for 65,709,080.7156 XRP and no shares redeemed in the quarter ended 30 June 2026, with 225,368,820.7314 XRP held at 30 June 2026 [2].

The 10-Q also breaks out “XRP contributed in-kind for the creation of Shares” and “XRP sold for the redemption of Shares” as separate line items [4].

Who does the work around an XRP ETF?

Authorized participants do most of it. Canary describes them as financial firms authorized to buy or redeem its shares [1]. The glossary on Stock Titan’s copy of the Bitwise filing calls them large broker-dealers or market professionals that act as a bridge between the fund and its market, keeping the share price close to the holdings and supplying liquidity [3].

They also bear the costs. Canary’s participants pay brokerage and transaction costs on their orders [1]. Bitwise says its participants get no fees or other compensation from the trust or sponsor [3]. The Bitwise filing also lists where a participant or liquidity provider may trade: brokered, dealer, principal-to-principal and exchange markets [3]. It names Coinbase Inc. as prime execution agent and defines a Coinbase Credit committed trade financing agreement [3].

Does fund-held XRP reach repo and lending markets another way?

The shares do, not the coins. Bitcoin.com News reported on September 9, 2026 that a filing made by a Schwab money fund on September 8, 2026 (as Bitcoin.com described it) listed Grayscale, Canary, Franklin and Bitwise XRP ETF shares as repo collateral [6]. The Schwab fund did not buy the shares. It lends cash short term, and the borrowing broker-dealer posts a basket of securities against the loan [6].

The amounts started small. XRP ETF collateral in those filings was $35,973 in April 2026 and $8.32 million in August, Bitcoin.com reported [6]. August was the first month all four funds appeared together, and the counterparty list widened from Barclays alone to BofA and JPMorgan [6]. Bitcoin.com wrote that acceptance means a risk desk ran the haircut math [6]. The details are in whether XRP ETF shares are used as repo collateral, and the wider count of deployed XRP is in how much institutional XRP is put to work.

What is the case that ETF XRP does little for the market?

The critics have numbers to point to. Bitcoin.com noted that each XRP collateral line was a fraction of a percent of the Schwab fund’s net assets [6]. It added that the five main spot products carried a $746.1 million paper loss at the end of June, which an $8 million collateral line does not offset [6]. A KuCoin News summary of a Cheeky Crypto video on September 22, 2026 said collateral acceptance adds zero direct XRP demand [7]. It argued cheaper dealer financing could tighten spreads, but XRP is bought only when new fund shares are created [7].

In its quarterly report dated March 31, 2026, the Bitwise XRP ETF trust said it only receives XRP in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Whether holding it out of trading makes XRP scarcer is argued in whether ETF purchases make XRP scarcer.