How do XRP ETF creations and redemptions work, and who moves the XRP?

The full answer

Who is allowed to create or redeem XRP ETF shares?

The funds do not trade shares with the public. Bitwise’s report for the quarter to June 30, 2026 says its trust does not buy shares directly from its shareholders [2]. Canary’s report for the same quarter describes its fund as an exchange-traded fund whose shares are listed and trade on an exchange. It adds that certain financial firms, called authorized participants, are authorized to purchase or redeem shares [4].

Each fund works in fixed blocks. Franklin’s XRP ETF issues and redeems shares only to authorized participants, and only in blocks of 50,000 shares, its report for the quarter to June 30, 2026 says [3]. Canary and Grayscale use blocks of 10,000 shares, their reports for that quarter say [4][6]. In the three months to June 30, 2026, Bitwise redeemed 118 baskets comprising 1,180,000 shares [2].

Bitwise’s report for the quarter to March 31, 2026 sets out the terms. The trust creates or redeems shares only at net asset value [1]. Each authorized participant pays the transfer agent a non-refundable fee for every order [1]. Bitwise’s report for the quarter to March 31, 2026 states that its trust does not itself transact on any digital asset markets and receives XRP only in connection with a creation order from an authorized participant or a liquidity provider [1]. Shares from one basket that reach the public at different times may carry different prices [1].

How do in-kind orders differ from cash orders?

Bitwise’s trust can create and redeem shares either in kind for XRP or for cash [1]. In an in-kind order, an authorized participant or its designee deposits XRP directly with the trust, or receives XRP directly from it [1]. Until the coins move, Bitwise books them as a receivable for in-kind creations or a payable for in-kind redemptions [1]. For cash creations, the same report records a payable for XRP purchased for the creation of shares that has not yet settled [1].

Canary’s creation orders can be settled in XRP or in cash. Canary XRP ETF’s Form 10-Q for the six months ended June 30, 2026 records 34,132,840 XRP purchased and 25,933,548 XRP contributed in kind for the creation of shares [4]. With a cash order, the authorized participant agrees to facilitate a deposit of cash with the fund’s cash custodian, which is U.S. Bank [4]. [4] Bank [4]. For cash redemptions, Canary’s sponsor transfers or sells enough XRP to pay the proceeds to authorized participants [4], and those firms carry the brokerage or transaction costs of the sale [4]. Franklin’s report describes the same step for its fund: on a cash redemption, the sponsor arranges for the XRP behind the redeemed shares to be sold and the proceeds paid out after fees and costs [3].

The Grayscale XRP Trust ETF’s report for the quarter to June 30, 2026 says authorized participants may only submit cash orders, because its agreements with them do not currently provide for in-kind creations and redemptions [6]. The trust holds cash only to carry out those orders [6]. Grayscale’s report says the XRP required for each Creation or Redemption Basket is set by dividing the XRP the trust owned at 4:00 p.m., New York time, on the trade date of the order, after deducting the XRP representing the U.S. dollar amounts the trust owes [6]. New York time on the trade date, after deducting an amount of XRP, as the report describes [6]. Each share stood for about 19.3781 XRP on June 30, 2026, against 19.4013 on December 31, 2025 [6]. Grayscale’s report says the fall mainly reflects XRP withdrawn to pay the sponsor’s fee [6].

Who holds the XRP, and who trades it?

For Bitwise, the XRP custodian is Coinbase Custody Trust Company, a New York State limited liability trust company [1]. It keeps the trust’s XRP in segregated accounts in the trust’s name [1]. Coinbase Inc., an affiliate of the custodian, is the prime execution agent [1]. Its agreement covers a prime broker account and trade execution [1]. BNY Mellon holds the trust’s cash [1]. Trades settle with the custodian generally within two business days, so the custodian’s count can briefly differ from the books [1].

The same report says the trust receives XRP only through creation orders from an authorized participant or a liquidity provider, and does not itself trade on crypto markets [1]. Those firms may trade in brokered, dealer, principal-to-principal and exchange markets [1].

Other funds use similar set-ups. Franklin names Coinbase Custody for its XRP and BNY Mellon for its cash [3]. Canary’s report for the quarter to June 30, 2026 names Coinbase Custody and BitGo Trust [4]. Grayscale names Coinbase Custody as custodian and BNY Mellon as transfer agent [5]; the custodian holds the private keys to the trust’s wallets [6]. On September 29, 2026, 21Shares listed Anchorage Digital Bank, BitGo Bank & Trust and Coinbase Custody International as custodians for its fund [7]. The page on whether regulated institutions can safely custody XRP covers these firms.

How do creations and redemptions show up in each fund’s XRP count?

Bitwise’s fund added about 76,214,395 XRP from creations in the three months to March 31, 2026. It paid out about 12,419,772 XRP for redemptions and about 113,045 XRP for its sponsor fee [1]. That fee runs at 0.34% a year of the trust’s XRP holdings [1]. Holdings went from about 131,223,200 XRP on December 31, 2025 [2] to about 194,904,778 on March 31, 2026 [1]. Over the full six months to June 30, creations added about 181,530,188 XRP and redemptions took out about 25,610,148 [2]. The fund ended June with about 286,838,446 XRP [2].

Franklin’s fund issued 6,050,000 shares for about 65,709,081 XRP in the three months to June 30, 2026, and redeemed none [3]. Its holdings rose from about 159,659,740 XRP to about 225,368,821 XRP over the quarter [3].

Grayscale moved the other way early in the year. In the three months to March 31, 2026, its fund redeemed about 102,825,907 XRP and took in about 26,385,823 XRP [5]. Holdings fell from about 122,230,386 XRP to about 45,774,148 XRP [5]. Across the six months to June 30, it took in about 36,272,725 XRP and redeemed about 103,407,401 XRP, ending June with about 55,035,728 XRP [6]. Canary’s fund held 231,279,303 XRP on June 30, 2026 [4]. In the six months to June 30, 2026, Canary’s 10-Q records 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 [4]. Later totals are on the page about how much XRP the US spot ETFs hold.

For the first half, Grayscale’s report gives about 103,407,401 XRP redeemed, a realized loss of $34.161 million on the sale of XRP to meet redemptions, and 55,035,728 XRP held at June 30, 2026 [6].

Does every ETF share purchase mean someone buys XRP?

XRP Insights, an XRP data site, said in its September 30, 2026 guide that when an investor buys a share, the issuer must purchase and lock up XRP, reducing the circulating supply on exchanges [8]. The filings describe a narrower path, the creation orders set out above. Flows also run in both directions, as Grayscale’s first quarter of 2026 shows [5]. The page asking whether ETF purchases make XRP scarcer tests the scarcity claim against these numbers.