Bitwise has updated its S-1 registration filing with the SEC, providing new details about its proposal to launch an XRP ETF.

Release of Updated Bitwise Filing

Today's filing follows the initial submission on October 2. Bitwise was the first institution to file for an XRP ETF, followed by Canary Capital on October 9. The updates involve the ETF's structure, custody arrangements, and mechanisms for creation and redemption of shares.

Structure and Custody of XRP ETF

According to the updated S-1 form, XRP will be held under Coinbase Custody, primarily in cold storage, with occasional transfers to hot wallets for operations and paying Trust’s expenses. Coinbase Custody is an institutional service and affiliate of Coinbase, Inc. The custody agreement ensures that the fund's assets are segregated from the custodian's funds to protect against theft and unauthorized key use. Coinbase will act as a Prime Execution Agent, managing XRP sales and purchases on behalf of the Trust across connected venues like its own exchange, Bitstamp, Kraken, LMAX, and four unnamed partners.

Risks and Legal Disputes

Bitwise acknowledges the risks from the ongoing legal dispute between the SEC and XRP issuer Ripple. The dispute began in 2020. In 2023, Judge Torres ruled that secondary sales of XRP did not qualify as securities. Bitwise notes that if XRP is classified as a security, the XRP ETF could be considered an unregistered investment company, potentially resulting in civil and criminal liability and forcing the fund to liquidate its assets.

If either Bitwise or Canary Capital receives SEC approval, it will be the first spot XRP ETF available to US investors. However, OTC traders already have access to XRP exposure through the Grayscale XRP Trust.