Bitwise XRP ETF Annual Report - How They Did This Year

This guide reviews the Bitwise XRP ETF's annual report. It covers the year ending December 31, 2025. The ETF performed well. Its Net Asset Value (NAV) grew 85% this year. This closely followed XRP's rising market price. Assets Under Management (AUM) reached $275 million. Market growth and new investments caused this. This report explains the ETF's operations. It covers its financial health and key results. We also discuss important risks simply.

What the Bitwise XRP ETF Is and How It Works

This ETF trades as "XRP" on NYSE Arca. It lets investors track XRP's price, a digital asset.

• It's an "Exchange-Traded Fund" (ETF) for XRP: The fund holds actual XRP. It issues shares that trade on NYSE Arca. By December 31, 2025, the ETF held about 500 million XRP. This was its total digital asset holding.
• Its main goal: Its main goal is to track XRP's value. This is after paying its operating costs. The ETF mirrors XRP's performance. Investors get exposure without buying XRP directly. They avoid securing it themselves. The ETF charges a 0.75% annual Sponsor's fee. This fee comes from the fund's assets daily.
• It holds actual XRP: This ETF holds actual XRP. It is physically backed. This means it owns XRP directly. It does not use derivatives or other complex tools. This links its value directly to XRP's price.
• It's "hands-off": Bitwise Investment Advisers, LLC, the Sponsor, manages the ETF passively. They do not actively trade. They don't try to time the market. They also don't try to lessen price drops. The ETF simply holds XRP. It reflects XRP's price changes.
• No borrowing to invest: The ETF does not use leverage. It does not borrow money for more XRP. This avoids bigger risks from debt.
• How its value is measured: The ETF's value is calculated daily. It uses the CME CF XRP – Dollar Reference Rate. This is a trusted XRP price benchmark. It covers major trading platforms. ETF shares traded $15 million daily on average. This shows good liquidity for investors.

Why Invest in This ETF Instead of Buying XRP Directly?

The ETF offers several advantages for investors interested in XRP:

• Easy access: You can buy and sell ETF shares easily. Use your regular brokerage account. It's like trading traditional stocks. This simplifies investing. You avoid complex crypto exchanges.
• No direct XRP handling: You avoid technical issues. No need to worry about security. The ETF handles buying and storing XRP. It manages all digital asset custody.

Who's Looking After the XRP?

• Coinbase Custody: Coinbase Custody Trust Company, LLC stores the ETF's XRP. They are a regulated digital asset custodian.
• Important note on insurance: Coinbase Custody has its own private insurance. But these XRP holdings are not FDIC insured. FDIC insurance protects bank deposits up to $250,000. It does not cover digital assets. Coinbase's private insurance covers specific risks. This includes theft or loss from security breaches. It also covers employee misconduct. However, it does not cover market price changes. It also doesn't cover the custodian's bankruptcy. This is a big risk compared to traditional assets.

How Shares Are Created and Redeemed

The ETF's shares are created and redeemed. This happens through "Authorized Participants" (APs). APs are usually large financial firms. This process keeps the ETF's market price close to its NAV.

• "Baskets" of shares: Shares are created and redeemed in large blocks. These are called "Baskets." Each Basket has 10,000 shares.
• Two ways to trade:
  1. In-Kind: APs can exchange XRP for new ETF shares. This is called creation. They can also give back ETF shares for XRP. This is called redemption. This direct exchange lowers costs. It also reduces market impact.
  2. Cash: APs can use U.S. dollars to buy new shares. They can also get cash when redeeming. The ETF then buys or sells XRP. This settles the cash transaction.
• Daily adjustments: The XRP needed for one "Basket" changes daily. This accounts for the ETF's ongoing expenses. Mainly, it covers the 0.75% annual Sponsor's fee. This fee slowly reduces the XRP per share.

What Are the Risks?

Investing in the Bitwise XRP ETF carries several inherent risks:

• XRP is unique: XRP's value comes from its use in Ripple payments. It also depends on general market demand. Its value is not tied to company profits or interest. A decentralized ledger records its ownership. This differs from assets held by banks or brokers. XRP's regulatory status has faced scrutiny. This includes legal cases with the SEC. By December 31, 2025, some clarity may exist. But regulatory uncertainty is still a big risk. It affects how people view and use XRP.
• Market volatility: Digital assets, including XRP, have wild price swings. XRP's price moved over 120% in 2025. This shows its unpredictable nature. Fast, big price changes can cause large losses.
• Regulatory changes: Digital asset rules are always changing. New laws or rules could appear. These cover taxes, trading, or custody. They might hurt the ETF's value or operations. XRP's specific rules remain a key area for change.
• Global events: Big economic factors can affect digital assets. Geopolitical events or global crises also matter. These include recessions or pandemics. They can change investor mood and market liquidity. This can cause XRP and the ETF's price to fall.
• Fees can change: The ETF's Sponsor can change its terms. This includes the management fee. The Sponsor does not need shareholder approval. The current annual fee is 0.75%. This fee could increase in the future. This is not currently planned. The ETF would tell shareholders about big changes.
• No FDIC insurance: As noted, FDIC insurance does not cover the XRP. This means investors could lose money. This happens if Coinbase's private insurance doesn't cover it. Examples include operational failures or market risks. You lack the protection of bank deposits.