Grayscale's spot XRP exchange-traded fund product, GXRP, will support in-kind creation and redemption that allow XRP to be deposited and withdrawn directly.

On Oct. 6, blockchain outlet The Crypto Basic reported that Grayscale disclosed the operational change through supplemental registration statement materials and filings with the U.S. Securities and Exchange Commission (SEC).

The key change is how shares are created and redeemed in the ETF's primary market. GXRP previously processed cash orders only. Under that structure, authorised participants, or APs, had to pay cash rather than deliver XRP directly. Now qualified APs, or firms designated by them, can place in-kind orders. For creation, XRP is transferred directly to the trust and GXRP shares are issued accordingly. For redemption, shares are surrendered and XRP is withdrawn from the trust. The cash order method will remain in place.

The change was reflected after contracts were signed on Sept. 29. A prospectus supplement dated Oct. 5 said contracts with Macquarie Capital USA and Virtu Americas were also amended to support in-kind procedures. As a result, creation and redemption in GXRP's primary market can be done using XRP itself without starting with cash each time.

The custody structure was also revised. Coinbase Custody will remain as the existing primary custodian, while Anchorage Digital Bank was added as a custodian. Grayscale said it did not replace the existing custody structure and that XRP can be split between the two custodians at the manager's discretion. It has not disclosed how much will be moved to Anchorage.

Grayscale also set out conditions related to custody. It said it expects XRP held at Anchorage to remain in cold storage, but added that some tokens could temporarily pass through a hot wallet when needed for creation and redemption or for paying trust expenses. It said adding another custodian is a risk-management measure as the trust grows.

With the overhaul, GXRP diversified custodians and expanded its creation and redemption methods. APs can now create or redeem ETF shares not only through the existing cash method but also by directly exchanging XRP.