- Bitwise has filed with the SEC to launch a spot Avalanche ETF backed by AVAX tokens.
- REX Osprey will launch XRP and Dogecoin ETFs under the Investment Company Act of 1940.
- These funds could bring altcoins into mainstream portfolios and add institutional flows.
Crypto asset manager Bitwise has filed an S-1 registration with the U.S. Securities and Exchange Commission (SEC) for a spot Avalanche (AVAX) ETF. The company said it would use Coinbase Custody for secure storage and track the CME CF Avalanche–Dollar Reference Rate. According to the filing, the trust provides investors with the opportunity to access the market for Avalanche through a traditional brokerage account. This is done without the potential barriers to entry or risks involved with acquiring and holding Avalanche directly.
Bitwise added that the structure will enable investors to implement strategic and tactical asset allocation efficiently. It will also allow strategies that use Avalanche by investing in the shares rather than purchasing, holding, and trading the asset directly.
The filing notes AVAX functions as the native token of the Avalanche blockchain, used for transactions, staking, governance, and supporting decentralized applications. The prospectus also warns of potential vulnerabilities, including validator penalties known as slashing, liquidity challenges during staking lock-ups, and possible protocol or consensus failures.
Founded in 2017, Bitwise already manages several crypto funds, including index products and ETFs tracking Bitcoin and Ethereum. Earlier in September, the firm registered an Avalanche trust in Delaware, a preliminary step before the S-1 filing. Rival managers Grayscale and VanEck have also submitted applications to launch AVAX-based ETFs.
XRP and Dogecoin ETFs Approach Launch
On the other hand, REX-Osprey is preparing to debut two new altcoin ETFs. The first, the REX-Osprey XRP ETF, is expected to begin trading on Friday under the ticker XRPR, following the SEC’s 75-day review window, and will be the first U.S. ETF offering spot exposure to XRP.
The fund will operate under the Investment Company Act of 1940, allowing products to take effect automatically unless the SEC raises objections. This approval path is considered more straightforward than the Securities Act of 1933 used for spot Bitcoin ETFs.
ETF Store President Nate Geraci stated that there would be another ‘litmus’ test for the ETF and pointed out that futures-based XRP ETFs are already approaching $1 billion in assets.
Meanwhile, the second, which is the Dogecoin ETF, will be trading under the ticker DOJE. It will use a Cayman Islands subsidiary to gain exposure through futures or derivatives. Unlike XRPR, the DOJE structure will not directly hold Dogecoin, thus causing performance to diverge from the spot market.
Related: SEC Delays Altcoin ETF Decisions for Bitwise and Grayscale
Risks and Market Implications
These developments show altcoins moving toward mainstream investment products, but various risks remain. Regulatory approval has not been obtained, and the SEC can also delay or impose new disclosure requirements. Moreover, with custody risks, like theft or hacking, it is a challenge to hold digital assets directly.
Tracking errors may occur in ETFs that use derivatives, like the Dogecoin Fund. Fast inflows could strain liquidity and affect prices. In addition to this, altcoins also face governance issues, unstable fundamentals, and possible changes in regulatory classification for AVAX, XRP, and Dogecoin.
Meanwhile, investor misunderstanding could also arise with a mix in direct holdings, derivatives, or other securities, which could confuse retail participants, who expect straightforward spot exposure. With the launch of three altcoin ETFs—AVAX, XRP, and Dogecoin—regulators and asset managers are gauging market appetite for altcoin-based products. But the question remains: what happens if these altcoin ETFs become a hit, and what could jeopardize them?
