Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade Shares of the CoinShares XRP ETF Under Nasdaq Rule 5711(d), 10667-10676 [2025-03032]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 90, Number 36 (Tuesday, February 25, 2025)]
[Notices]
[Pages 10667-10676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-03032]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102443; File No. SR-NASDAQ-2025-012]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change To List and Trade Shares of 
the CoinShares XRP ETF Under Nasdaq Rule 5711(d)

February 19, 2025.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 7, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the CoinShares 
XRP ETF (the ``Trust'') under Nasdaq Rule 5711(d) (``Commodity-Based 
Trust Shares''). The shares of the Trust are referred to herein as the 
``Shares.''
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under Nasdaq 
Rule 5711(d), which governs the listing and trading of Commodity-Based 
Trust Shares on the Exchange.\3\ CoinShares Co. is the sponsor of the 
Trust (the ``Sponsor'').\4\ Any statements or representations included 
in this proposal regarding: (a) the description of the reference assets 
or trust holdings; (b) limitations on the reference assets or trust 
holdings; (c) dissemination and availability of the reference asset or 
intraday indicative value; or (d) the applicability of Nasdaq listing 
rules specified in this proposal shall constitute continued listing 
standards for the Shares listed on the Exchange.
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    \3\ The Commission approved Nasdaq Rule 5711 in Securities 
Exchange Act Release No. 66648 (March 23, 2012), 77 FR 19428 (March 
30, 2012) (SR-NASDAQ-2012-013).
    \4\ See Registration Statement on Form S-1, dated January 24, 
2025 filed with the Commission on behalf of the Trust. The 
descriptions of the Trust, the Shares, the Index (as defined below), 
and XRP contained herein are based, in part, on information in the 
Registration Statement. The Registration Statement in not yet 
effective and the Shares will not trade on the Exchange until such 
time that the Registration Statement is effective.
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Overview of the Trust and the Shares
    According to the Registration Statement, the Trust is a Delaware 
Statutory Trust that was formed on December 10, 2024. The Trust will 
operate pursuant to a trust agreement (the ``Trust Agreement''), as 
amended and/or restated from time to time. CSC Delaware Trust Company, 
a Delaware corporation, is the trustee of the Trust (the ``Trustee''). 
A third party will be the transfer agent of the Trust (in such 
capacity, the ``Transfer Agent'') and the administrator of the Trust 
(in such capacity, the ``Administrator''). A third-party custodian (the 
``Custodian'') will be responsible for the custody of the Trust's XRP.
    According to the Registration Statement, each Share will represent 
a fractional undivided beneficial interest in and ownership of the 
Trust. The

[[Page 10668]]

Trust holds only XRP and cash. The investment objective of the Trust is 
for the Shares to reflect the performance of the value of XRP as 
represented by the Compass Crypto Reference Index XRP--4 p.m. NY Time 
(the ``Index''), less the Trust's liabilities and expenses. In seeking 
to achieve its investment objective, the Trust will hold XRP and will 
value its Shares daily based on the value of XRP as reflected by the 
Index. The Index is calculated independently by Compass Financial 
Technologies (the ``Benchmark Administrator'').
    According to the Registration Statement, the Trust is passive and 
is not managed like a corporation or an active investment vehicle. The 
Trust is not registered as an investment company under the Investment 
Company Act of 1940, and the Sponsor believes that the Trust is not 
required to register under the Investment Company Act of 1940. The 
Trust will not hold or trade in commodity futures contracts or other 
derivative contracts regulated by the Commodity Exchange Act of 1936, 
as administered by the Commodity Futures Trading Commission (the 
``CFTC''). The Sponsor believes that the Trust is not a commodity pool 
for purposes of the CEA, and that neither the Sponsor nor the Trustee 
is subject to regulation as a commodity pool operator or a commodity 
trading adviser in connection with the operation of the Trust.
    When the Trust creates or redeems Shares, it will do so in blocks 
of 5,000 Shares (a ``Basket'') based on the quantity of XRP 
attributable to each Share of the Trust (net of accrued but unpaid 
expenses and liabilities). The Trust issues Baskets to authorized 
participants on an ongoing basis in exchange for cash, which is used to 
purchase XRP that is deposited for safekeeping with the Custodian.
    Neither the Trust, nor the Sponsor, nor the Custodian, nor any 
other person associated with the Trust will, directly or indirectly, 
engage in action where any portion of the Trust's XRP is used to earn 
additional XRP or generate rewards or other income. The Trust will not 
acquire and will disclaim any incidental right (``IR'') or IR asset 
received, for example as a result of forks or airdrops, and such assets 
will not be taken into account for purposes of determining the Trust's 
net asset value (``NAV'').
Investment Objective
    According to the Registration Statement, the Trust's investment 
objective is for the Shares to reflect the performance of the value of 
XRP as represented by the Index, less the Trust's liabilities and 
expenses. While an investment in the Shares is not a direct investment 
in XRP, the Shares are designed to provide investors with a cost-
effective and convenient way to gain investment exposure to XRP. 
Generally speaking, a substantial direct investment in XRP may require 
expensive and sometimes complicated arrangements in connection with the 
acquisition, security and safekeeping of the XRP and may involve the 
payment of substantial fees to acquire such XRP from third-party 
facilitators through cash payments of U.S. dollars. Because the value 
of the Shares is correlated with the value of the XRP held by the 
Trust, it is important to understand the investment attributes of, and 
the market for, XRP.
XRP Background
    According to the Registration Statement, XRP is a digital asset 
that is created and transmitted through the operations of the ``XRP 
Ledger,'' a decentralized ledger upon which XRP transactions are 
processed and settled.
    XRP can be used to pay for goods and services or it can be 
converted to fiat currencies, such as the U.S. dollar. The XRP Ledger 
is based on a shared public ledger similar to the Bitcoin network and 
other distributed ledgers. However, the XRP Ledger differentiates 
itself from other digital asset networks in that its stated primary 
function is transactional utility, not store of value. The XRP Ledger 
is designed to be a global real-time payment and settlement system. As 
a result, the XRP Ledger and XRP aim to improve the speed at which 
parties on the network may transfer value while also reducing the fees 
and delays associated with the traditional methods of interbank 
payments.
    Unlike a centralized system, no single entity controls the XRP 
Ledger. Instead, a network of independent nodes validates transactions 
pursuant to a consensus-based algorithm. It is this mechanism, as 
opposed to the proof-of-work mechanism utilized by the Bitcoin 
blockchain, that allows the XRP Ledger to be fast, energy-efficient and 
scalable, and therefore suitable for its most prominent use case, the 
facilitation of cross-border financial transactions. Unlike proof-of-
work systems, which require massive computational power to secure the 
network, the consensus-based algorithm utilized by the XRP Ledger is 
extremely lightweight in terms of energy usage, as it relies on trusted 
validators rather than mining. The XRP Ledger can handle up to 1,500 
transactions per second, far more than the Bitcoin or Ethereum 
blockchain. This makes the XRP Ledger suitable for high-volume use 
cases, such as cross-border payments. Lastly, because validators do not 
need to spend resources on mining, transaction fees are extremely low 
(typically a fraction of a cent per transaction).
    Although launched in 2012, the concept for XRP and the XRP Ledger 
traces back to 2004 when a web developer started work on a 
decentralized payment system that would enable users to create and 
trade their own cryptocurrencies in a peer-to-peer manner. More of an 
alternative payment system than a cryptocurrency itself, it laid the 
conceptual foundation of what would become XRP and the XRP Ledger. The 
project was eventually handed over to Jed McCaleb, Arthur Britto and 
David Schwartz in 2011 who were seeking to address some of their 
concerns related to the scalability of bitcoin and the energy intensive 
nature of the ``proof-of-work'' validation mechanism utilized by the 
Bitcoin network that relied on ``mining.'' Their goal was to create a 
decentralized ledger that used a network of validators that would agree 
on transactions in a fast and secure manner, without relying upon 
mining. This led to the development of a consensus-based algorithm. It 
is this mechanism, as opposed to the proof-of-work mechanism utilized 
by the Bitcoin blockchain or the ``proof-of-stake'' mechanism utilized 
by the Ethereum network, that allows the XRP Ledger to be fast, energy-
efficient and scalable, and therefore suitable for its most prominent 
use case, the facilitation of cross-border financial transactions. 
Proponents of the consensus-based algorithm often cite several key 
advantages it offers. The first is near-instantaneous settlement of 
transactions, which normally occurs within 3-5 seconds. The second is 
energy efficiency. Unlike proof-of-work systems, which require massive 
computational power to secure the network, the consensus-based 
algorithm is relatively light in terms of energy usage, as it relies on 
trusted validators rather than mining. A third advantage is 
scalability. The XRP Ledger can handle up to 1,500 transactions per 
second, far more than the Bitcoin or Ethereum blockchain. This makes 
the XRP Ledger an attractive option for high-volume use cases, such as 
cross-border payments. Lastly, because validators do not need to spend 
resources on mining, transaction fees are extremely low (typically a 
fraction of a cent per transaction).
    Transactions are validated on the XRP Ledger by a network of 
independent validator nodes. These nodes do not mine new blocks but 
participate in a

[[Page 10669]]

consensus process to ensure that transactions are valid and correctly 
ordered on the XRP Ledger. Any node can be a validator, but for 
practical purposes, the XRP Ledger depends on a list of trusted 
validators known as the Unique Node List or ``UNL.'' Validators are 
entities (which can be individuals, institutions, or other 
organizations) that run nodes to participate in the consensus process. 
These validators ensure the integrity and accuracy of the ledger. Each 
node in the network maintains a Unique Node List--a list of other 
validators that the node trusts to reliably validate transactions. The 
XRP Ledger's decentralized architecture means that different nodes may 
maintain different UNLs, but there needs to be some overlap in the UNLs 
for the consensus mechanism to work effectively. Similar to the Bitcoin 
network, anyone can join and start using the XRP Ledger; however, 
unlike the Bitcoin network, which operates on a fully permissionless 
blockchain, the XRP Ledger is maintained by a network of trusted nodes 
that accept or reject transactions on the XRP Ledger.
    A transaction on the XRP Ledger begins when a user submits a 
transaction to the XRP Ledger network. The submitted transaction is 
broadcast to all validator nodes. Validators do not immediately confirm 
transactions as final; instead, they go through a process of reaching 
consensus on which transactions should be included in the next ledger 
version. Each validator collects incoming transactions into a proposed 
ledger, called a candidate ledger, and then exchanges their proposed 
candidate ledgers (also known as proposals) with other validators. The 
actual consensus process happens over several rounds. In each round, 
validators attempt to come to an agreement on which transactions should 
be included in the next ledger version. In each round, validators 
examine the transactions in the proposed ledger from the previous round 
and compare it to the proposals from other validators in their UNL. If 
the validator sees that a supermajority (typically 80% of validators) 
of trusted validators have proposed the same set of transactions, the 
validator updates its proposal to align with the majority. After a few 
rounds of exchanging proposals, when a supermajority (typically 80%) of 
validators have agreed on the same set of transactions, that version of 
the ledger is considered valid. All participating validators then 
update their copy of the ledger with the new, agreed-upon transactions. 
The final ledger version is broadcast to all nodes, and it becomes the 
new ``official'' state of the ledger.
    Prior to engaging in XRP transactions directly on the XRP Ledger, a 
user generally must first install on its computer or mobile device a 
XRP Ledger software program that will allow the user to generate a 
private and public key pair associated with a XRP address. The XRP 
Ledger software program and the XRP address also enable the user to 
connect to the XRP Ledger and transfer XRP to, and receive XRP from, 
other users.
    Each XRP Ledger address, or wallet, is associated with a unique 
``public key'' and ``private key'' pair. To receive XRP, the XRP 
recipient must provide its public key to the party initiating the 
transfer. This activity is analogous to a recipient for a transaction 
in U.S. dollars providing a routing address in wire instructions to the 
payor so that cash may be wired to the recipient's account. The payor 
approves the transfer to the address provided by the recipient by 
``signing'' a transaction that consists of the recipient's public key 
with the private key of the address from where the payor is 
transferring the XRP. The recipient, however, does not make public or 
provide to the sender its related private key.
    XRP can be held in different types of wallets, including hardware 
wallets, software wallets and custodial wallets provided by digital 
asset trading platforms. The wallet essentially holds the private keys 
that control the account on the XRP Ledger. The private key is crucial 
for signing transactions on the ledger. Whoever possesses the private 
key associated with an XRP Ledger account effectively controls the XRP 
held by that account. While XRP is the native asset, the XRP Ledger 
also supports the holding and transferring of other assets (like USD, 
EUR, or other digital assets) through a system of trust lines. However, 
these other assets are not XRP itself; they are IOUs issued by 
institutions or individuals on the ledger.
    Neither the recipient nor the sender reveal their private keys in a 
transaction because the private key authorizes transfer of the funds in 
that address to other users. Therefore, if a user loses his or her 
private key, the user may permanently lose access to the XRP contained 
in the associated address. Likewise, XRP is irretrievably lost if the 
private key associated with them is deleted and no backup has been 
made. When sending XRP, a user's XRP Ledger software program must 
validate the transaction with the associated private key. In addition, 
since every computation on the XRP Ledger requires processing power, 
there is a transaction fee involved with the transfer that is paid by 
the payor. The resulting digitally validated transaction is sent by the 
user's XRP Ledger software program to the XRP Ledger validators to 
allow transaction confirmation.
    Some XRP transactions are conducted ``off-blockchain'' (i.e., 
through centralized book-entries) and are therefore not recorded on the 
XRP Ledger. These ``off-blockchain transactions'' involve the transfer 
of control over, or ownership of, a specific digital wallet holding XRP 
or the reallocation of ownership of certain XRP in a pooled-ownership 
digital wallet, such as a digital wallet owned by a digital asset 
trading platforms. In contrast to on-blockchain transactions, which are 
publicly recorded on the XRP Ledger, information and data regarding 
off-blockchain transactions are generally not publicly available. 
Therefore, off-blockchain transactions are not truly XRP Ledger 
transactions in that they do not involve the transfer of transaction 
data on the XRP Ledger and do not reflect a movement of XRP between 
addresses recorded in the XRP Ledger. For these reasons, off-blockchain 
transactions are subject to risks as any such transfer of XRP ownership 
is not protected by the protocol behind the XRP Ledger or recorded in, 
and validated through, the ledger mechanism.
    XRP can also be held in escrow on the XRP Ledger, meaning the XRP 
is locked up and released only when certain conditions are met (e.g., 
at a specific time or when a particular event occurs). This is a native 
feature of the ledger, providing flexibility for complex financial 
contracts. XRP can also be held in payment channels, which allow for 
off-ledger transactions to occur between two parties, with the final 
balance being settled on the ledger later. Each XRP Ledger account must 
also hold a minimum reserve of XRP (currently 10 XRP) which cannot be 
spent. This ensures that only legitimate accounts are created and 
maintained. The XRP Ledger supports multi-signature accounts, where 
multiple keys can be required to authorize transactions. This adds an 
extra layer of security for holding and transferring large amounts of 
XRP.
    Unlike other digital assets such as bitcoin or ether, XRP was not 
mined gradually over time. Instead, all 100 billion XRP tokens were 
created at the time of the XRP Ledger's launch in 2012. This means that 
every XRP token that exists today was generated from the outset, 
without the need for a mining process. Of the 100 billion XRP generated 
by the XRP Ledger's code, the

[[Page 10670]]

founders of Ripple Labs retained 20 billion XRP and the rest, nearly 80 
billion XRP, was provided to Ripple Labs or will be released to Ripple 
Labs at established intervals.
    In 2017, to address concerns about the large portion of XRP held by 
Ripple Labs, the company introduced an escrow mechanism to lock up a 
significant portion of its XRP holdings. Under this mechanism, Ripple 
Labs placed 55 billion XRP (55% of the total supply) into a series of 
time-locked escrow accounts. The escrow releases 1 billion XRP per 
month over 55 months. This process adds a level of predictability and 
transparency about how much XRP can enter the market each month. If 
Ripple Labs does not use all of the 1 billion XRP released in a given 
month, the remaining amount is placed back into escrow for future 
release. The purpose of this escrow system is to reassure the market 
that Ripple Labs will not release too much XRP at once, which could 
potentially disrupt XRP's price or market dynamics.
Index
    According to the Registration Statement, the Index is designed to 
provide a daily, 4:00 p.m. Eastern Time (``ET'') reference rate of the 
U.S. dollar price of one XRP that may be used to develop financial 
products. The Index is representative of the XRP trading activity on 
selected crypto trading platforms. For purposes of determining the 
value of the Trust's XRP, the Trust uses the Index to calculate a per-
XRP value in U.S. dollars (the ``XRP Index Price''). The XRP Index 
Price is published between 4:00 p.m. and 4:30 p.m. ET on each trading 
day.
    The Sponsor believes that the use of the Index is reflective of a 
reasonable valuation of the average spot price of XRP and that 
resistance to manipulation is a priority aim of its design methodology. 
The methodology: (i) takes an observation period and divides it in 
twelve (12) time-equally sized partitions of trade records; (ii) then 
calculates the volume-weighted median of all trade prices within each 
partition; and (iii) determines the value from the arithmetic mean of 
the volume-weighted medians, equally weighted. By employing the 
foregoing steps, the Index thereby seeks to ensure that transactions in 
XRP conducted at outlying prices do not have an undue effect on the 
value of a specific partition, large trades or clusters of trades 
transacted over a short period of time will not have an undue influence 
on the index level, and the effect of large trades at prices that 
deviate from the prevailing price are mitigated from having an undue 
influence on the benchmark level.
    In addition, the Sponsor notes that an oversight function is 
implemented by the Benchmark Administrator in seeking to ensure that 
the Index is administered through codified policies for Index 
integrity.
Net Asset Value
    According to the Registration Statement, the Shares are valued on a 
daily basis as of 4:00 p.m. ET. The value of XRP held by the Trust is 
determined based on the fair market value price for XRP determined by 
the Benchmark Administrator.
    The Trust's NAV is calculated by:
     taking the current market value of its XRP (determined as 
set forth below) and any other; and assets;
     subtracting any liabilities (including accrued by unpaid 
expenses).
    The Trust's NAV per Share is calculated by taking the Trust's NAV 
and dividing it by the total amount of Shares outstanding.
    The XRP held by the Trust will typically be valued based on the XRP 
Index Price. The Administrator calculates the NAV of the Trust once 
each business day. The end-of-day XRP price is calculated using the XRP 
Index Price as of 4:00 p.m. ET. However, NAVs are not officially struck 
until later in the day (often by 5:30 p.m. ET and almost always by 8:00 
p.m. ET). The pause after 4:00 p.m. ET provides an opportunity for the 
Sponsor to detect, flag, investigate, and correct unusual pricing 
should it occur. If the Sponsor determines in good faith that the Index 
does not reflect an accurate XRP price, then the Sponsor will instruct 
the Benchmark Administrator to employ an alternative method to 
determine the fair value of the Trust's assets. The Compass Crypto 
Reference Index XRP--4 p.m. NY Time shall constitute the Index, but if 
the Index becomes unavailable, or if the Sponsor determines in good 
faith that such Index does not reflect an accurate price for XRP, then 
the Sponsor will employ an alternative method to determine the fair 
value of the Trust's assets.\5\
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    \5\ Such alternative method will only be employed on an ad hoc 
basis. Any permanent change to the calculation of the NAV would 
require a proposed rule change under Rule 19b-4.
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Availability of Information and Intraday Indicative Value
    In addition to the price transparency of the Index, the Trust will 
provide information regarding the Trust's XRP holdings as well as 
additional data regarding the Trust. The website for the Trust, which 
will be publicly accessible at no charge, will contain the following 
information: (a) the prior business day's NAV per Share; (b) the prior 
business day's Nasdaq official closing price; (c) calculation of the 
premium or discount of such Exchange official closing price against 
such NAV per Share; (d) data in chart form displaying the frequency 
distribution of discounts and premiums of the Exchange's official 
closing price against the NAV, within appropriate ranges for each of 
the four previous calendar quarters (or for the life of the Trust, if 
shorter); (e) the prospectus; and (f) other applicable quantitative 
information. The Trust will also disseminate the Trust's holdings on a 
daily basis on the Trust's website. Quotation and last sale information 
regarding the Shares will be disseminated through the facilities of the 
relevant securities information processor.
    The intraday indicative value (``IIV'') will be calculated by using 
the prior day's closing NAV per Share as a base and updating that value 
during the Exchange's regular market session of 9:30 a.m. to 4:00 p.m. 
ET (the ``Regular Market Session'') to reflect changes in the value of 
the Trust's XRP holdings during the trading day. The IIV disseminated 
during the Regular Market Session should not be viewed as an actual 
real-time update of the NAV, because NAV per Share is calculated only 
once at the end of each trading day based upon the relevant end-of-day 
values of the Trust's investments. The IIV will be widely disseminated 
on a per-Share basis every 15 seconds during the Regular Market Session 
through the facilities of the relevant securities information processor 
by market data vendors. In addition, the IIV will be available through 
online information services, such as Bloomberg and Reuters.
    Quotation and last sale information for XRP is disseminated through 
a variety of major market data vendors. Information related to trading, 
including price and volume information, in XRP is available from major 
market data vendors and from the trading platforms on which XRP are 
traded. Depth of book information is also available from XRP trading 
platforms. The normal trading hours for XRP trading platforms are 24 
hours per day, 365 days per year.
    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's Nasdaq official closing price and trading 
volume information

[[Page 10671]]

for the Shares will be published daily in the financial section of 
newspapers.
Custody of the Trust's XRP
    The Custodian will be responsible for custody of the Trust's XRP. 
The Custodian is a qualified custodian under Rule 206-4 of the 
Investment Adviser Act. The Custodian will custody the Trust's XRP 
pursuant to a custody agreement. The custody agreement requires the 
Custodian to maintain the Trust's XRP in segregated accounts that 
clearly identify the Trust as owner of the respective accounts and 
assets held in those accounts; the segregation will be both from the 
proprietary property of the Custodian and the assets of any other 
customer. Such arrangements are generally deemed to be ``bankruptcy 
remote,'' that is, in the event of an insolvency of the Custodian, 
assets held in such segregated accounts would not become property of 
the Custodian's estate and would not be available to satisfy claims of 
creditors of the Custodian. In addition, the Custodian carries fidelity 
insurance, which covers assets held by the Custodian in custody from 
risks such as theft of funds. XRP owned by the Trust will at all times 
be held by, and in the control of, the Custodian, and transfer of such 
XRP to or from the Custodian will occur only in connection with 
creation and redemptions of Shares.
    The Custodian carefully considers the design of the physical, 
operational and cryptographic systems for secure storage of the Trust's 
private keys in an effort to lower the risk of loss or theft. The 
Custodian utilizes a variety of security measures to ensure that 
private keys necessary to transfer digital assets remain uncompromised 
and that the Trust maintains exclusive ownership of its assets. The 
operational procedures of the Custodian are reviewed by third-party 
advisors with specific expertise in physical security. The devices that 
store the keys will never be connected to the internet or any other 
public or private distributed network--this is colloquially known as 
``cold storage.'' Only specific individuals are authorized to 
participate in the custody process, and no individual acting alone will 
be able to access or use any of the private keys. In addition, no 
combination of the executive officers of the Sponsor or the investment 
professionals managing the Trust, acting alone or together, will be 
able to access or use any of the private keys that hold the Trust's 
XRP.
Creation and Redemption of Shares
    The Trust creates and redeems Shares from time to time, but only in 
one or more Baskets. Baskets are only made in exchange for delivery to 
the Trust or the distribution by the Trust of the amount of cash 
represented by the Baskets being created or redeemed (the ``Basket 
Deposit''). The amount of cash required in a Basket Deposit (the 
``Basket Cash Deposit'') is based on the quantity or value of the 
quantity, as applicable, of XRP and cash attributable to each Share of 
the Trust (net of accrued but unpaid fees and expenses of the Trust) 
being created or redeemed determined as of 4:00 p.m. ET on the day the 
order to create or redeem Baskets is properly received.
    Baskets will only made in exchange for delivery to the Trust or the 
distribution by the Trust of the amount of cash represented by the 
Shares being created or redeemed, the amount of which is based on the 
value of the XRP attributable to each Share of the Trust (net of 
accrued but unpaid fees and expenses of the Trust) being created or 
redeemed determined as of 4:00 p.m. ET on the day the order to create 
or redeem Baskets is properly received. The Trust will engage in XRP 
transactions for converting cash into XRP (in association with purchase 
orders) and XRP into cash (in association with redemption orders).
    The only persons that may place orders to create or redeem Baskets 
are authorized participants (``Authorized Participants''). Authorized 
Participants must be (1) registered broker-dealers or other securities 
market participants, such as banks or other financial institutions, 
that are not required to register as broker-dealers to engage in 
securities transactions, and (2) Depository Trust Company participants. 
To become an Authorized Participant, a person must enter into an 
authorized participant agreement, which provides the procedures for the 
creation and redemption of Shares and for the delivery of the cash 
required for such creation and redemptions.
    Authorized Participants may act for their own accounts or as agents 
for broker-dealers, custodians and other securities market participants 
that wish to create or redeem Baskets. Shareholders who are not 
Authorized Participants will only be able to redeem their Shares 
through an Authorized Participant. The Authorized Participants will 
deliver only cash to create Shares and will receive only cash when 
redeeming Shares. Further, Authorized Participants will not directly or 
indirectly purchase, hold, deliver, or receive XRP as part of the 
creation or redemption process or otherwise direct the trust or a third 
party with respect to purchasing, holding, delivering, or receiving XRP 
as part of the creation or redemption process.
Applicable Standard
    The Commission has previously approved or disapproved exchange 
filings to list and trade series of Trust Issued Receipts, including 
spot-based Commodity-Based Trust Shares, on the basis of whether the 
listing exchange has in place a comprehensive surveillance sharing 
agreement with a regulated market of significant size related to the 
underlying commodity to be held.\6\ The Commission has also 
consistently recognized, however, that this is not the exclusive means 
by which an ETP listing exchange can meet this

[[Page 10672]]

statutory obligation.\7\ A listing exchange could, alternatively, 
demonstrate that ``other means to prevent fraudulent and manipulative 
acts and practices will be sufficient'' to justify dispensing with a 
surveillance-sharing agreement with a regulated market of significant 
size.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 78262 (July 8, 
2016), 81 FR 78262 (July 14. 2016) (the ``Winklevoss Proposal''). 
The Winklevoss Proposal was subsequently disapproved by the 
Commission. See Securities Exchange Act Release No. 83723 (July 26, 
2018), 83 FR 37579 (August 1, 2018) (the ``Winklevoss Order''). 
Prior orders from the Commission have pointed out that in every 
prior approval order for Commodity-Based Trust Shares, there has 
been a derivatives market that represents the regulated market of 
significant size, generally a Commodity Futures Trading Commission 
(the ``CFTC'') regulated futures market. Further to this point, the 
Commission's prior orders have noted that the spot commodities and 
currency markets for which it has previously approved spot ETPs are 
generally unregulated and that the Commission relied on the 
underlying futures market as the regulated market of significant 
size that formed the basis for approving the series of Currency and 
Commodity-Based Trust Shares, including gold, silver, platinum, 
palladium, copper, and other commodities and currencies. The 
Commission specifically noted in the Winklevoss Order that the 
approval order issued related to the first spot gold ETP ``was based 
on an assumption that the currency market and the spot gold market 
were largely unregulated.'' See Winklevoss Order at 37592. As such, 
the regulated market of significant size test does not require that 
the spot market be regulated in order for the Commission to approve 
this proposal, and precedent makes clear that an underlying market 
for a spot commodity or currency being a regulated market would 
actually be an exception to the norm. These largely unregulated 
currency and commodity markets do not provide the same protections 
as the markets that are subject to the Commission's oversight, but 
the Commission has consistently looked to surveillance sharing 
agreements with the underlying futures market in order to determine 
whether such products were consistent with the Act. See Securities 
Exchange Act No. 99306 (January 10, 2024), 89 FR 3008 (January 17, 
2024) (Self-Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq 
Stock Market LLC; Cboe BZX Exchange, Inc.; Order Granting 
Accelerated Approval of Proposed Rule Changes, as Modified by 
Amendments Thereto, To List and Trade Bitcoin-Based Commodity-Based 
Trust Shares and Trust Units) (the ``Spot Bitcoin ETP Approval 
Order''); 100224 (May 23, 2024), 89 FR 46937 (May 30, 2024) (Self-
Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq Stock Market 
LLC; Cboe BZX Exchange, Inc.; Order Granting Accelerated Approval of 
Proposed Rule Changes, as Modified by Amendments Thereto, To List 
and Trade Shares of Ether-Based Exchange-Traded Products) (the 
``Spot ETH ETP Approval Order'').
    \7\ See Winklevoss Order, 83 FR at 37580; see Spot Bitcoin ETP 
Approval Order, 89 FR at 3009; see Spot ETH ETP Approval Order 89 FR 
at 46938.
---------------------------------------------------------------------------

    The Commission recently issued orders granting approval for 
proposals to list bitcoin- and ether-based commodity trust shares and 
bitcoin- and ether-based trust issued receipts (these proposed funds 
are nearly identical to the Trust, but proposed to hold bitcoin and 
ether, respectively, instead of XRP) (``Spot Bitcoin ETPs'' and ``Spot 
ETH ETPs''). In both the Spot Bitcoin ETP Approval Order and Spot ETH 
ETP Approval Order, the Commission found that sufficient ``other 
means'' of preventing fraud and manipulation had been demonstrated that 
justified dispensing with a surveillance-sharing agreement with a 
market of significant size. Specifically, the Commission found that 
while the Chicago Mercantile Exchange (``CME'') futures market for both 
bitcoin and ether were not of ``significant size'' with respect to the 
spot market, the Exchange demonstrated that other means could be 
reasonably expected to assist in surveilling for fraudulent and 
manipulative acts and practices in the specific context of the 
proposals.
    Both the Exchange and the Sponsor believe that this proposal and 
the included analysis are sufficient to establish that there are 
sufficient ``other means'' of preventing fraud and manipulation that 
warrant dispensing of the surveillance-sharing agreement with a 
regulated market of significant size, as was done with both Spot 
Bitcoin ETPs and Spot ETH ETPs, and that this proposal should be 
approved.
    The Commission has approved numerous series of Trust Issued 
Receipts,\8\ including Commodity-Based Trust Shares,\9\ to be listed on 
U.S. national securities exchanges. In order for any proposed rule 
change from an exchange to be approved, the Commission must determine 
that, among other things, the proposal is consistent with the 
requirements of Section 6(b)(5) of the Act, specifically including: (i) 
the requirement that a national securities exchange's rules are 
designed to prevent fraudulent and manipulative acts and practices; and 
(ii) the requirement that an exchange proposal be designed, in general, 
to protect investors and the public interest. The Exchange believes 
that this proposal is consistent with the requirements of Section 
6(b)(5) of the Act.
---------------------------------------------------------------------------

    \8\ Pursuant to Nasdaq Rule 5720(a), the term ``Trust Issued 
Receipt'' means a security (a) that is issued by a trust which holds 
specified securities deposited with the trust; (b) that, when 
aggregated in some specified minimum number, may be surrendered to 
the trust by the beneficial owner to receive the securities; and (c) 
that pays beneficial owners dividends and other distributions on the 
deposited securities, if any are declared and paid to the trustee by 
an issuer of the deposited securities.
    \9\ Pursuant to Nasdaq Rule 5711(d)(iv), the term ``Commodity-
Based Trust Shares'' means a security (1) that is issued by a trust 
that holds (a) a specified commodity deposited with the trust, or 
(b) a specified commodity and, in addition to such specified 
commodity, cash; (2) that is issued by such trust in a specified 
aggregate minimum number in return for a deposit of a quantity of 
the underlying commodity and/or cash; and (3) that, when aggregated 
in the same specified minimum number, may be redeemed at a holder's 
request by such trust which will deliver to the redeeming holder the 
quantity of the underlying commodity and/or cash.
---------------------------------------------------------------------------

    As noted above, the Commission has recognized that the ``regulated 
market of significant size'' standard is not the only means for 
satisfying Section 6(b)(5) of the Act, specifically providing that a 
listing exchange could demonstrate that ``other means to prevent 
fraudulent and manipulative acts and practices'' are sufficient to 
justify dispensing with the requisite surveillance-sharing 
agreement.\10\ While there is currently no U.S.-regulated futures 
market for XRP, in the Spot Bitcoin ETF Approval Order and Spot ETH ETF 
Approval Order the Commission determined that the CME bitcoin futures 
market and CME ETH future market, respectively, were not of 
``significant size'' related to the spot market. Instead, the 
Commission found that sufficient ``other means'' of preventing fraud 
and manipulation had been demonstrated that justified dispensing with a 
surveillance-sharing agreement of significant size. The Exchange and 
Sponsor believe that this proposal provides for other means of 
preventing fraud and manipulation justify dispensing with a 
surveillance-sharing agreement of significant size.
---------------------------------------------------------------------------

    \10\ See Winklevoss Order at 37580. The Commission has also 
specifically noted that it ``is not applying a `cannot be 
manipulated' standard; instead, the Commission is examining whether 
the proposal meets the requirements of the Exchange Act and, 
pursuant to its Rules of Practice, places the burden on the listing 
exchange to demonstrate the validity of its contentions and to 
establish that the requirements of the Exchange Act have been met.'' 
Id. at 37582.
---------------------------------------------------------------------------

    Over the past several years, U.S. investor exposure to XRP, through 
OTC XRP Funds and digital asset trading platforms, has grown into 
billions of dollars with a fully diluted market cap of greater than 
$300 billion. The Exchange believes that approving this proposal (and 
comparable proposals) provides the Commission with the opportunity to 
allow U.S. investors with access to XRP in a regulated and transparent 
exchange-traded vehicle that would act to limit risk to U.S. investors 
by: (i) reducing premium and discount volatility; (ii) reducing 
management fees through meaningful competition; and (iii) providing an 
alternative to the custody of spot XRP.
    The policy concerns that the Exchange Act is designed to address 
are also otherwise mitigated by the fact that the size of the market 
for the underlying reference asset ($300+ billion fully diluted value) 
and the nature of the XRP ecosystem reduces its susceptibility to 
manipulation. The geographically diverse and continuous nature of XRP 
trading makes it difficult and prohibitively costly to manipulate the 
price of XRP and, in many instances, the XRP market can be less 
susceptible to manipulation than the equity, fixed income, and 
commodity futures markets. There are a number of reasons this is the 
case, including that there is not inside information about revenue, 
earnings, corporate activities, or sources of supply; manipulation of 
the price on any single venue would require manipulation of the global 
XRP price in order to be effective; a substantial over-the-counter 
market provides liquidity and shock-absorbing capacity; XRP's 24/7/365 
nature provides constant arbitrage opportunities across all trading 
venues; and it is unlikely that any one actor could obtain a dominant 
market share.
    Further, XRP is arguably less susceptible to manipulation than 
other commodities that underlie ETPs; there may be inside information 
relating to the supply of the physical commodity such as the discovery 
of new sources of supply or significant disruptions at mining 
facilities that supply the commodity that simply are inapplicable as it 
relates to certain crypto-assets, including XRP. Further, the Exchange 
believes that the fragmentation across XRP trading platforms and 
increased adoption of XRP, as displayed through increased user 
engagement and trading volumes, and the XRP network make manipulation 
of XRP prices through continuous trading activity more difficult. 
Moreover, the linkage between the XRP markets and the presence of 
arbitrageurs in those markets means that the manipulation of the price 
of XRP price on any single venue would require manipulation of the 
global XRP price in order to be effective. Arbitrageurs must have funds 
distributed across multiple XRP trading platforms in order to take 
advantage of temporary price dislocations, thereby making it unlikely 
that there will be strong concentration

[[Page 10673]]

of funds on any particular XRP trading platform. As a result, the 
potential for manipulation on a particular XRP trading platform would 
require overcoming the liquidity supply of such arbitrageurs who are 
effectively eliminating any cross-market pricing differences. For all 
of these reasons, XRP is not particularly susceptible to manipulation, 
especially as compared to other approved ETP reference assets.
Initial and Continued Listing
    The Shares will be subject to Nasdaq Rule 5711(d)(vi), which sets 
forth the initial and continued listing criteria applicable to 
Commodity-Based Trust Shares. The Exchange will obtain a representation 
that the Trust's NAV per Share will be calculated daily and will be 
made available to all market participants at the same time. A minimum 
of 40,000 Shares will be required to be outstanding at the time of 
commencement of trading on the Exchange. Upon termination of the Trust, 
the Shares will be removed from listing. The Trustee will be a trust 
company having substantial capital and surplus and the experience and 
facilities for handling corporate trust business, as required under 
Nasdaq Rule 5711(d)(vi)(D) and no change will be made to the Trustee 
without prior notice to and approval of the Exchange.
    As required in Nasdaq Rule 5711(d)(viii), the Exchange notes that 
any registered market maker (``Market Maker'') in the Shares must file 
with the Exchange, in a manner prescribed by the Exchange, and keep 
current a list identifying all accounts for trading the underlying 
commodity, related futures or options on futures, or any other related 
derivatives, which the registered Market Maker may have or over which 
it may exercise investment discretion. No registered Market Maker in 
the Shares shall trade in the underlying commodity, related futures or 
options on futures, or any other related derivatives, in an account in 
which a registered Market Maker, directly or indirectly, controls 
trading activities, or has a direct interest in the profits or losses 
thereof, which has not been reported to the Exchange as required by 
Nasdaq Rule 5711(d). In addition to the existing obligations under 
Exchange rules regarding the production of books and records, the 
registered Market Maker in the Shares shall make available to the 
Exchange such books, records or other information pertaining to 
transactions by such entity or any limited partner, officer or approved 
person thereof, registered or non-registered employee affiliated with 
such entity for its or their own accounts in the underlying commodity, 
related futures or options on futures, or any other related 
derivatives, as may be requested by the Exchange.
    The Exchange is able to obtain information regarding trading in the 
Shares and the underlying XRP or any other XRP derivative through 
members acting as registered Market Makers, in connection with their 
proprietary or customer trades.
    As a general matter, the Exchange has regulatory jurisdiction over 
its members, and their associated persons. The Exchange also has 
regulatory jurisdiction over any person or entity controlling a member, 
as well as a subsidiary or affiliate of a member that is in the 
securities business. A subsidiary or affiliate of a member organization 
that does business only in commodities would not be subject to Exchange 
jurisdiction, but the Exchange could obtain information regarding the 
activities of such subsidiary or affiliate through surveillance sharing 
agreements with regulatory organizations of which such subsidiary or 
affiliate is a member.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. The Exchange will 
allow trading in the Shares from 4:00 a.m. to 8:00 p.m. ET. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. The Shares of the Trust will conform to 
the initial and continued listing criteria set forth in Nasdaq Rule 
5711(d) and will comply with the requirements of Rule 10A-3 of the Act.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. The Exchange will halt trading in the Shares 
under the conditions specified in Nasdaq Rules 4120 and 4121, including 
without limitation the conditions specified in Nasdaq Rule 4120(a)(9) 
and (10) and the trading pauses under Nasdaq Rules 4120(a)(11) and 
(12).
    Trading may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) the extent to which trading is not 
occurring in the XRP underlying the Shares; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present.
    If the IIV or the value of the Index is not being disseminated as 
required, the Exchange may halt trading during the day in which the 
interruption to the dissemination of the IIV or the value of the Index 
occurs. If the interruption to the dissemination of the IIV or the 
value of the Index persists past the trading day in which it occurred, 
the Exchange will halt trading no later than the beginning of the 
trading day following the interruption.
    In addition, if the Exchange becomes aware that the NAV per Share 
with respect to the Shares is not disseminated to all market 
participants at the same time, it will halt trading in the Shares until 
such time as the NAV per Share is available to all market participants.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. The surveillance 
program includes real-time patterns for price and volume movements and 
post-trade surveillance patterns (e.g., spoofing, marking the close, 
pinging, phishing). Trading of Shares on the Exchange will be subject 
to the Exchange's surveillance program for derivative products, as well 
as cross-market surveillances administered by FINRA, on behalf of the 
Exchange pursuant to a regulatory services agreement, which are also 
designed to detect violations of Exchange rules and applicable federal 
securities laws. The Exchange is responsible for FINRA's performance 
under this regulatory services agreement.
    The Exchange will require the Trust to represent to the Exchange 
that it will advise the Exchange of any failure by the Trust to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Exchange Act, the Exchange 
will surveil for compliance with the continued listing requirements. If 
the Trust is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under the 
Nasdaq 5800 Series. In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on

[[Page 10674]]

behalf of the Exchange, or both, may obtain trading information 
regarding trading in the Shares or any XRP derivatives from such 
markets and other entities. The Exchange also may obtain information 
regarding trading in the Shares or any XRP derivatives via the ISG, 
from other exchanges who are members or affiliates of the ISG, or with 
which the Exchange has entered into a comprehensive surveillance 
sharing agreement.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its 
members in an information circular (``Information Circular'') of the 
special characteristics and risks associated with trading the Shares. 
Specifically, the Information Circular will discuss the following: (1) 
the procedures for creations and redemptions of Shares in Baskets (and 
that Shares are not individually redeemable); (2) Section 10 of Nasdaq 
General Rule 9, which imposes suitability obligations on Nasdaq members 
with respect to recommending transactions in the Shares to customers; 
(3) how information regarding the IIV and NAV is disseminated; (4) the 
risks involved in trading the Shares during the pre-market and post-
market sessions when an updated IIV will not be calculated or publicly 
disseminated; (5) the requirement that members deliver a prospectus to 
investors purchasing newly issued Shares prior to or concurrently with 
the confirmation of a transaction; and (6) trading information. The 
Information Circular will also discuss any exemptive, no action and 
interpretive relief granted by the Commission from any rules under the 
Act.
    The Information Circular will also reference the fact that there is 
no regulated source of last sale information regarding XRP, that the 
Commission has no jurisdiction over the trading of XRP as a commodity.
    Additionally, the Information Circular will reference that the 
Trust is subject to various fees and expenses described in the 
Registration Statement. The Information Circular will also disclose the 
trading hours of the Shares. The Information Circular will disclose 
that information about the Shares will be publicly available on the 
Trust's website.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has approved numerous series of Trust Issued 
Receipts, including Commodity-Based Trust Shares, to be listed on U.S. 
national securities exchanges. In order for any proposed rule change 
from an exchange to be approved, the Commission must determine that, 
among other things, the proposal is consistent with the requirements of 
Section 6(b)(5) of the Act, specifically including: (i) the requirement 
that a national securities exchange's rules are designed to prevent 
fraudulent and manipulative acts and practices; and (ii) the 
requirement that an exchange proposal be designed, in general, to 
protect investors and the public interest. The Exchange believes that 
this proposal is consistent with the requirements of Section 6(b)(5) of 
the Act.
    The Commission has approved numerous series of Trust Issued 
Receipts, including Commodity-Based Trust Shares, to be listed on U.S. 
national securities exchanges. In order for any proposed rule change 
from an exchange to be approved, the Commission must determine that, 
among other things, the proposal is consistent with the requirements of 
Section 6(b)(5) of the Act, specifically including: (i) the requirement 
that a national securities exchange's rules are designed to prevent 
fraudulent and manipulative acts and practices; and (ii) the 
requirement that an exchange proposal be designed, in general, to 
protect investors and the public interest. The Exchange believes that 
this proposal is consistent with the requirements of Section 6(b)(5) of 
the Act.
    As noted above, the Commission has recognized that the ``regulated 
market of significant size'' standard is not the only means for 
satisfying Section 6(b)(5) of the act, specifically providing that a 
listing exchange could demonstrate that ``other means to prevent 
fraudulent and manipulative acts and practices'' are sufficient to 
justify dispensing with the requisite surveillance-sharing agreement 
with the underlying spot market. The Exchange and Sponsor believe that 
such conditions are present.
    The Exchange believes that the proposal is designed to protect 
investors and the public interest. Over the past several years, U.S. 
investor exposure to XRP, through OTC XRP Funds and digital asset 
trading platforms, has grown into billions of dollars with a fully 
diluted market cap of greater than $300 billion. The Exchange believes 
that approving this proposal (and comparable proposals) provides the 
Commission with the opportunity to allow U.S. investors with access to 
XRP in a regulated and transparent exchange-traded vehicle that would 
act to limit risk to U.S. investors by: (i) reducing premium and 
discount volatility; (ii) reducing management fees through meaningful 
competition; and (iii) providing an alternative to the custody of spot 
XRP.
    The policy concerns that the Exchange Act is designed to address 
are also otherwise mitigated by the fact that the size of the market 
for the underlying reference asset ($300+ billion fully diluted value) 
and the nature of the XRP ecosystem reduces its susceptibility to 
manipulation. The geographically diverse and continuous nature of XRP 
trading makes it difficult and prohibitively costly to manipulate the 
price of XRP and, in many instances, the XRP market can be less 
susceptible to manipulation than the equity, fixed income, and 
commodity futures markets. There are a number of reasons this is the 
case, including that there is not inside information about revenue, 
earnings, corporate activities, or sources of supply; manipulation of 
the price on any single venue would require manipulation of the global 
XRP price in order to be effective; a substantial over-the-counter 
market provides liquidity and shock-absorbing capacity; XRP's 24/7/365 
nature provides constant arbitrage opportunities across all trading 
venues; and it is unlikely that any one actor could obtain a dominant 
market share.
    Further, XRP is arguably less susceptible to manipulation than 
other commodities that underlie ETPs; there may be inside information 
relating to the supply of the physical commodity such as the discovery 
of new sources of supply or significant disruptions at mining 
facilities that supply the commodity that simply are inapplicable as it 
relates to certain crypto-assets, including XRP. Further, the Exchange 
believes that the fragmentation across XRP trading platforms and 
increased adoption of XRP, as displayed through increased user 
engagement and trading volumes, and the XRP network make manipulation 
of XRP prices through continuous trading activity more difficult. 
Moreover, the linkage between the XRP markets and the presence of 
arbitrageurs in those markets means that

[[Page 10675]]

the manipulation of the price of XRP price on any single venue would 
require manipulation of the global XRP price in order to be effective. 
Arbitrageurs must have funds distributed across multiple XRP trading 
platforms in order to take advantage of temporary price dislocations, 
thereby making it unlikely that there will be strong concentration of 
funds on any particular XRP trading platform. As a result, the 
potential for manipulation on a particular XRP trading platform would 
require overcoming the liquidity supply of such arbitrageurs who are 
effectively eliminating any cross-market pricing differences. For all 
of these reasons, XRP is not particularly susceptible to manipulation, 
especially as compared to other approved ETP reference assets.
    The Exchange further believes that the proposed rule change is 
designed to prevent fraudulent and manipulative acts and practices and 
to protect investors and the public interest in that the Shares will be 
listed and traded on the Exchange pursuant to the initial and continued 
listing criteria set forth in Nasdaq Rule 5711(d). The Exchange has in 
place surveillance procedures that are adequate to properly monitor 
trading in the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws. As 
discussed above, the surveillance program includes real-time patterns 
for price and volume movements and post-trade surveillance patterns 
(e.g., spoofing, marking the close, pinging, phishing). Trading of 
Shares on the Exchange will be subject to the Exchange's surveillance 
program for derivative products, as well as cross-market surveillances 
administered by FINRA, on behalf of the Exchange pursuant to a 
regulatory services agreement, which are also designed to detect 
violations of Exchange rules and applicable federal securities laws. 
The Exchange is responsible for FINRA's performance under this 
regulatory services agreement.
    The Exchange will require the Trust to represent to the Exchange 
that it will advise the Exchange of any failure by the Trust to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Exchange Act, the Exchange 
will surveil for compliance with the continued listing requirements. If 
the Trust is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under the 
Nasdaq 5800 Series. In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.
    The Exchange will communicate as needed regarding trading in the 
Shares with other markets and other entities that are members of the 
ISG, and the Exchange may obtain trading information regarding trading 
in the Shares or any XRP derivatives from such markets and other 
entities.
    Trading in Shares of the Trust will be halted if the circuit 
breaker parameters have been reached or because of market conditions or 
for reasons that, in the view of the Exchange, make trading in the 
Shares inadvisable. These may include unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
Shares that will enhance competition among market participants, to the 
benefit of investors and the marketplace.
    For all the above reasons, the Exchange believes that the proposed 
rule change is consistent with the requirements of Section 6(b)(5) of 
the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change rather will facilitate the listing and trading of 
additional exchange-traded product that will enhance competition among 
both market participants and listing venues, to the benefit of 
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NASDAQ-2025-012 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NASDAQ-2025-012. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NASDAQ-2025-012 and should 
be submitted on or before March 18, 2025.


[[Page 10676]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-03032 Filed 2-24-25; 8:45 am]
BILLING CODE 8011-01-P