Altcoin ETFs' Record Run Signals Regulatory Shift for Crypto Expansion

The REX-Osprey XRP and Dogecoin ETFs made a record-breaking debut on U.S. markets, collectively generating $54.7 million in trading volume on their first day of trading. The XRP ETF (ticker: XRPR) led the charge with $37.7 million in activity, surpassing the average first-day volume of $1 million for new ETFs and outperforming existing XRP futures ETFs by fivefold within its first 90 minutes. The Dogecoin ETF (DOJE) followed closely with $17 million in volume, placing it among the top five ETF debuts of 2025, according to Bloomberg ETF analyst Eric Balchunas. The combined performance signals robust investor demand for altcoin exposure beyond Bitcoin and Ethereum, with analysts viewing the launch as a positive omen for the regulatory pipeline of upcoming crypto ETFs.

The XRP ETF’s $37.7 million debut marked the largest first-day volume for any 2025 ETF launch, a figure that exceeded Balchunas’ expectations by a significant margin. Within 90 minutes of trading, XRPR had already secured $24 million in trades, demonstrating its appeal to both retail and institutional investors. The fund’s structure, which tracks XRP’s spot price through offshore subsidiaries and foreign exchange-traded products, avoids direct crypto holdings while complying with the Investment Company Act of 1940 (40 Act). This regulatory framework allows faster approval times (75 days versus 240 days for 33 Act funds) but imposes restrictions on direct crypto ownership. Analysts noted that XRPR’s success highlights growing confidence in XRP’s market position, despite its 1.64% decline in the previous 24 hours.

The Dogecoin ETF’s $17 million volume also exceeded initial forecasts, which had predicted only $2.5 million in activity. Balchunas described the performance as “shockingly solid,” particularly for a fund registered under the 40 Act, which typically faces higher compliance hurdles. DOJE’s structure mirrors XRPR’s, with exposure gained through Cayman Islands subsidiaries and European/Canadian ETPs. Dogecoin’s 1.78% drop in the prior day did not deter investors, who appeared drawn to its status as the largest memecoin by market capitalization. The fund’s performance was notable given its launch by REX Shares and Osprey Funds, which are not among the largest ETF issuers, suggesting broad-based enthusiasm for crypto-related products.

The 40 Act framework’s role in the ETFs’ success underscores a shift in regulatory dynamics. Unlike the 33 Act, which governs most traditional ETFs and imposes stricter diversification rules, the 40 Act allows for quicker approvals but limits direct exposure to crypto assets. Both XRPR and DOJE sidestep these limitations by investing in offshore vehicles that hold the underlying tokens. This structure, while compliant with current regulations, introduces complexities such as indirect exposure and reliance on foreign markets. Analysts argue that the strong debut could encourage regulators to streamline approvals for future altcoin and staking-focused ETFs, particularly as the SEC recently updated listing standards to expedite product launches.

The launches reflect broader trends in crypto adoption, with investors seeking diversified exposure to digital assets through regulated vehicles. The SEC’s approval of spot ETFs for Bitcoin and Ether in early 2024 laid the groundwork for altcoin ETFs, and the XRP and Dogecoin products now represent the next phase. Balchunas emphasized that the performance of these funds could pave the way for additional altcoin ETFs, including those tied to Solana and other emerging cryptocurrencies. The success of XRPR and DOJE also highlights the potential for staking-focused funds, though current regulatory constraints prevent direct staking exposure. As the market matures, the interplay between investor demand, regulatory clarity, and product innovation will likely shape the trajectory of crypto ETFs in the coming months.