Summary Volatility Shares XRP ETF (XRPI) receives a 'Hold' rating due to high fees and tracking inefficiencies versus spot ETFs. XRPI offers a 2.98% TTM yield via monthly, variable distributions, providing income absent in spot XRP ETFs. XRPI's $100M+ AUM supports liquidity and institutional relevance, though underperformance versus spot ETFs persists. While long-term prospects for XRP-USD remain cautiously optimistic, near-term headwinds and capital outflows are likely. In a previous article, I recently covered the Volatility Shares Solana ETF ( SOLZ ). In that article, I argued that due to SOLZ’s higher expense ratio, lack of access to staking yield, and structural inefficiencies, investors would fare better investing in Solana spot ETFs. That said, I now turn to another Volatility Shares ETF, the XRP ETF ( XRPI ). While structurally similar to other futures-based crypto funds (i.e., no direct token holdings and instead, exposure via derivatives), I argue that XRPI fills a gap in the market that the other Volatility Shares futures-based fund ( SOLZ ) does not achieve. Despite a considerably higher expense ratio (when compared to spot ETFs) and tracking inefficiencies, the yield component is attractive for investors looking for both XRP exposure and income. For these reasons, I assign a ‘Hold’ rating to XRPI. Fund Overview The volatility Shares XRP ETF ( XRPI ) began trading on May 22 nd , 2025, before the approval of XRP spot-based products. The fund issuer has a number of crypto-based futures ETFs providing both 1x and 2x coverage to tokens such as Bitcoin, Ethereum, XRP, and Chainlink. The fund’s objective is long-term capital appreciation, mirroring the returns of XRP-USD . According to the fund’s prospectus , “[XRPI] seeks to achieve its investment objective primarily through managed exposure to XRP futures contracts that trade only on an exchange registered with the CFTC (“XRP Futures Contracts”), and cash, cash-like instruments or high quality securities that serve as collateral to the Fund’s investments in XRP Futures Contracts (“Collateral Investments”). In seeking its investment objective, the Fund seeks to participate in 100% of the returns of XRP.” With that said, the fund does not maintain holdings in the XRP token itself, but rather derivatives such as futures and swaps. Structural Advantages & Disadvantages Disadvantages The main disadvantages of the fund are its expense ratio and tracking inefficiencies. While Volatility Shares is currently waiving a portion of the management fee until June 30 th , 2026 (with a current management fee of 0.94%), after the waiver period is over, the management fee will increase to 1.15%. Even with the partial waiver in place, XRPI has a considerably higher fee than all other spot XRP ETFs. Over time, this difference can have a real effect on compounded returns. *Current fee waiver (Source: Individual fund websites) Another disadvantage of the fund is the inefficient holding structure. Like other futures-based ETFs from Volatility Shares, XRPI relies on derivatives rather than directly holding the underlying asset, which can lead to performance deviations over time. In particular, losses can occur from selling lower-priced expiring contracts and buying higher-priced longer-dated ones. Over extended periods, this can have a continued negative effect on returns. The table below shows 1-month returns, with XRPI underperforming leading XRP ETFs by approximately 115 basis points. Performance Deviation (Source: Seeking Alpha) Additionally, in conjunction with the fund’s derivative holdings, a portion of the portfolio must remain in cash and treasuries as collateral. As a result, this limits the full participation in XRP’s upside price appreciation. When combined with higher fees and price tracking inefficiencies, these structural factors can lead to a return profile that fails to match that of the spot-based ETFs. Advantages While I acknowledge the disadvantages, the fund also has several positive factors working in its favor. In particular, AUM and yield are two positive attributes. Currently, the Canary XRP ETF ( XRPC ) and the Bitwise XRP ETF ( XRP ) are the leading spot ETFs based on AUM. Although XRPI falls towards the bottom of the pack of XRP ETFs, the fund still maintains assets under management of over $100 million. This is important, as crypto ETFs are still very new. As such, scale is meaningful. Large AUM translates to tighter spreads, improved institutional adoption, and lower risk of fund closures. While XRPI is not the largest XRP ETF, it maintains a respectable size, larger than smaller funds like GXRP and XRPR . (Source: Individual fund websites) Another positive attribute is the dividend. Unlike other cryptocurrencies that I have covered (namely, Ethereum and Solana), the XRP network does not offer yield. Therefore, spot XRP ETFs behave more like Bitcoin ETFs, with returns entirely dependent on price appreciation. For this reason, the dividend paid by XRPI offers investors a potential income opportunity (partially offsetting the high fee) while also allowing investors to benefit from the upside potential of the underlying token. According to Seeking Alpha , XRPI’s current dividend yield (TTM) is 2.98%. That said, the fund has a variable distribution policy that depends predominantly on realized trading gains and income generated from the interest on collateral. Currently, XRPI pays a monthly, variable distribution rather than fixed dividends, with income primarily generated from XRP futures activity and interest on cash holdings. Due to the fact that payouts depend largely on trading gains and market conditions, these payouts can fluctuate significantly. (Source: Seeking Alpha) Risks to Underlying Thesis While the yield component may be compelling for some income-oriented investors, general underperformance compared to spot ETFs and the underlying asset suggests further future divergence. In my view, this could have a negative effect on the futures-based fund, as capital flows to more efficient holding spot-based structures. If this were to occur, I would expect to see a continued decline in fund assets. Additionally, current market conditions remain bearish. Given the risk-off phase I are currently in, it is likely that we continue to see downward pressure on all cryptocurrency ETFs. Given XRPI’s reliance on derivatives rather than holding spot XRP, it is also likely that we could continue to see deviations in performance over time. Despite the advantages and disadvantages that I have covered in this article, XRPI still serves a potential purpose within the portfolio of certain investors. Namely, for investors who are comfortable with exposure via derivatives, its accessibility via traditional brokerage accounts continues to provide a frictionless way to gain exposure to XRP’s price movements while simultaneously introducing a yield component. While I think that spot-ETFs are generally better for most market participants, futures-based ETFs can still serve a role for individuals seeking exposure without the complexities of direct crypto ownership. Thesis for Underlying Cryptocurrency My long-term thesis remains cautiously optimistic for the XRP token. The XRP Ledger proves to be promising, given its design for payments and cross-border transactions. This is particularly true when considering the use cases for financial institutions being able to transfer value quickly without the need for pre-funded accounts. Its settlement speeds (~3-5 seconds) and low transaction costs make it attractive for high-frequency institutional payment activity, thus supporting my long-term bullish case if adoption continues to grow. While I have addressed concerns in previous articles, namely stablecoin usage compared to other major blockchains, and a smaller developer base, the continued adoption of the underlying technology (and rollout of new funds like XRPI and spot ETFs) proves to be bullish. With that said, I admit that XRP-USD is perhaps a more specialized network in terms of use cases when compared to other cryptocurrencies such as Ethereum or Solana. Additionally, I acknowledge that current market conditions appear generally bearish. With major cryptocurrencies like Bitcoin and Ethereum having completed their bull market phases towards the end of 2025, liquidity appears to still be moving along the risk curve out of cryptocurrencies and into lower-risk assets. With XRP-USD currently trading below significant moving averages, it is my view that near-term downward pressure will continue for the immediate foreseeable future. (Source: Stock Charts) Final Takeaway While not without its flaws, XRPI still provides a vehicle for investors to gain exposure to XRP-USD’s potential upside while simultaneously earning yield. The fund’s monthly distribution provides an income component that is otherwise absent in comparable spot XRP ETFs. However, this benefit comes at the added cost of a significantly higher management fee. At present, the distribution more than covers the management fee; however, this might not always be the case. While the yield component and AUM can currently be seen as a benefit, high fees and structural inefficiencies provide cause for concern. Over time, these factors are likely to result in performance that lags the underlying asset. That said, the ETF may still appeal to investors who prioritize accessibility, income generation, and exposure to derivatives. Ultimately, while the fund fills a niche within the crypto ETF landscape, I assign a “Hold” rating to XRPI. Additionally, while I remain cautiously optimistic on the long-term prospects of XRP-USD, shorter-term price action is likely to continue facing headwinds
