REX-Osprey XRP ETF faces 0.6% fee drag from layered CoinShares sleeve

REX-Osprey's XRPR ETF routed 40.25% of its $56.68 million portfolio through CoinShares' Physical XRP ETP on Aug. 24, stacking fees across two listed products.

The allocation follows the fund's disclosed mandate, which requires at least 40% of assets in securities such as ETFs and non-U.S. exchange-traded products, according to its June 30 prospectus. CoinShares says its product is 100% physically backed.

XRPR discloses a 0.75% total annual operating expense ratio, while CoinShares lists a 1.50% annual fee for its XRP ETP. Applying that fee to the Aug. 24 weight produces an estimated 0.60375 percentage-point annual drag inside XRPR before changes in allocation, prices or expenses.

For shareholders, the practical impact is return divergence: how closely XRPR's net asset value follows XRP after its own expenses, the weighted CoinShares fee, and the trading costs of maintaining the required securities sleeve.

How the second-layer fee stacks up

The Aug. 24 holdings snapshot reported 59.74% of XRPR held directly as XRP, with 4.7 million shares outstanding, a $12.09 net asset value and a $12.06 closing price. The remaining sleeve sits in the Jersey-domiciled CoinShares debt security listed on European exchanges, which reported $168.75 million of product assets on Aug. 21.

That split is not evidence the CoinShares position lacks XRP backing. CoinShares says its product is 100% physically backed, and XRPR's February shareholder report consolidates a Cayman subsidiary used for XRP exposure. The concern is cost, not backing.

The 0.60375 percentage-point estimate is not a fixed all-in XRPR fee. The underlying product's charge is reflected in its own value, while XRPR's 0.75% is the fund's disclosed operating expense figure. REX-Osprey's statement of additional information says shareholders indirectly bear acquired-vehicle fees in addition to the fund's own expenses, but the weight can change daily and accounting treatment can affect how the cost appears.

Trading frictions beyond the stated fee

The sleeve can also create tracking differences beyond the stated fee. XRPR investors trade a U.S.-listed ETF, while part of its exposure comes through a Jersey-domiciled debt security listed on European exchanges. The XRPR holdings snapshot does not show the position's current bid-ask spread, market depth or execution price.

Those market frictions matter when XRPR has to rebalance, create or redeem shares, or trade while the underlying venue is less liquid or operating on different hours. The extra security also adds an issuer, custody and trading-venue chain between XRPR and the XRP backing. CoinShares' physical-backing disclosure addresses the asset backing; it does not eliminate the legal and execution differences between holding XRP exposure through an ETP and obtaining it elsewhere.

The layered structure sits within a crowded field. Seven spot XRP ETFs now trade on U.S. exchanges, with Franklin Templeton's XRPZ charging a 0.19% expense ratio, the lowest base fee in spot crypto ETF history, and cumulative inflows across the group reaching $1.57 billion. XRP traded near $1.05 on Aug. 25, down 57% from its January high of $2.43.

This article is for informational purposes only and does not constitute investment advice.