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Dogecoin, a meme-based cryptocurrency created on a lark more than a decade ago, is now available to investors through the US public market.<\/p>\n
On September 18, investment fund management firms REX Financial and Osprey Funds jointly launched a dogecoin exchange-traded fund (ETF). The launch marks the first time that US investors are able to bet on memecoins\u2014which serve no purpose and promise no utility\u2014through a traditional brokerage, without handling crypto directly.<\/p>\n
ETFs are designed to track the price of an underlying asset\u2014whether metals, gold, or crypto. Loosely, for every dollar invested in an ETF, the operator stockpiles a dollar\u2019s worth of the asset, earning a fee as a percentage of the fund\u2019s total value.<\/p>\n
\u201cIf you ignore stablecoins, dogecoin is the sixth largest [cryptocurrency] by market cap in the world,\u201d Greg King, CEO and founder of REX and Osprey tells WIRED. \u201cIt\u2019s really just following the demand that\u2019s already out there in the native crypto space and providing access via a regulated vehicle.\u201d<\/p>\n
The extent of that demand is evident: With a first-day trading volume of almost $18 million, the dogecoin fund performed better on debut than many other ETFs launched in the US this year, according to James Seyffart, ETF research analyst at Bloomberg. \u201cPeople obviously want to trade it,\u201d says Seyffart.<\/p>\n
But it\u2019s less clear whether the arrival of memecoin ETFs is a net positive for the investing public. The purpose of capital markets is to create a more efficient means of funding endeavors likely to return value to society, some analysts contend, and memecoins promise nothing of the sort.<\/p>\n
\u201cI still don\u2019t really understand why a memecoin should be in an ETF wrapper to begin with,\u201d says Bryan Armour, director of ETF and passive strategies research for North America at investment research firm Morningstar. \u201cSomething started as a joke with a Shiba Inu as its character\u2014why should that be a part of capital markets?\u201d<\/p>\n
Before regulators at the Securities and Exchange Commission approved the first US-listed bitcoin ETFs in January 2024\u2014only after the courts had forced the agency\u2019s hand\u2014members of the crypto industry had fought for more than a decade for permission to package coins into funds.<\/p>\n
However, since Donald Trump returned to the White House, the US government has taken a far more permissive stance towards crypto, instructing prosecutors to deprioritize certain crypto-related offences, passing crypto-specific legislation, and appointing a crypto czar to oversee policy strategy. The SEC, for its part, has retreated from numerous lawsuits against high-profile crypto firms.<\/p>\n
The dogecoin ETF launch last week coincided with the release of a new ruleset by the SEC that will allow issuers to bring crypto-based ETFs to market without seeking specific permission on a case-by-case basis.<\/p>\n
\u201cBy approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets,\u201d said SEC chair Paul Atkins. \u201cThis approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America\u2019s trusted capital markets.\u201d<\/p>\n
Though REX and Osprey did not launch the dogecoin ETF under the new ruleset, instead taking an alternative route involving separate legal provisions to ensure it won the race to market, analysts expect the SEC\u2019s new listing standards to tee up a proliferation of crypto ETFs in the US. Under the ruleset, any crypto coin already listed on a market\u2014like Coinbase Derivatives\u2014that participates in the Intermarket Surveillance Group, a network of organizations that monitors for fraudulent activity, would automatically qualify for the ETF treatment.<\/p>\n
\u201cIt\u2019s a spaghetti cannon. They\u2019re going to cook up all these ETFs\u2014whether levered versions, inverse, or pure spot exposure\u2014and they\u2019re going to frickin shoot this cannon at the wall and see what sticks,\u201d says Seyffart. \u201cThat\u2019s what these ETF issuers do.\u201d<\/p>\n
Before the approval of bitcoin ETFs in 2024, proponents argued that they would create a valuable avenue for both laypeople and financial institutions to invest through a regulated vehicle in an asset marketed as a digital equivalent to gold, a hedge against inflation, and so on.<\/p>\n
Whatever the merits of the bitcoin investment case, the argument for memecoins is shakier. Typically modelled after a celebrity or popular internet reference, memecoins generate no revenue or cash flow, so their price depends entirely on caprices of the public mood and the vibes among investors. In the case of dogecoin, the supply of coins is even periodically diluted. \u201cWith a memecoin, it would be hard for a financial advisor to feel comfortable buying that for a client,\u201d says Armour.<\/p>\n
One\u2019s stance on the prospect of memecoin ETFs coming to market in droves might depend on personal politics.<\/p>\n
\u201cI\u2019m very much libertarian in the way the SEC should be operating\u2026The SEC\u2019s job is not to be a merit regulator. Its job is to be a disclosure regulator,\u201d says Seyffart. \u201cI personally don\u2019t own or trade any memecoins and probably won\u2019t own any memecoin ETFs. But it\u2019s a free market. People can do what they want.\u201d<\/p>\n
Others, including Armour, believe it\u2019s the joint responsibility of regulators, issuers, and investors to ensure that public markets aren\u2019t polluted with assets likely to inflict large and sudden losses.<\/p>\n
\u201cDoes the SEC approving putting it into an ETF make people who don\u2019t know what these things are think they are more legitimate?\u201d asks Armour. \u201cIt pulls more attention and assets towards speculation, which typically is not a good long-term strategy for investors,\u201d he claims.<\/p>\n
The SEC declined to comment.<\/p>\n
In King\u2019s opinion, moralizing over which assets should and should not be stuffed into an ETF is besides the point; the government has defined what is permitted. REX and Osprey \u201cprimarily view it as providing access to investments that already exist,\u201d says King. \u201c[If there\u2019s] investor demand, it\u2019s something we\u2019ll consider launching.\u201d<\/p>\n
In January, REX and Osprey filed for permission to launch ETFs for a variety of other crypto coins, among them a memecoin promoted by Trump. The TRUMP memecoin has been roundly condemned by critics as an unethical money-grab that opens up a potential vector for bribery.<\/p>\n
\u201cWe just play by the rules,\u201d says King. \u201cThe lines have been drawn\u2026by the administration.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Save StorySave this storySave StorySave this story Dogecoin, a meme-based cryptocurrency created on a lark more than a decade ago, is now available to investors through the US public market. On September 18, investment fund management firms REX Financial and Osprey Funds jointly launched a dogecoin exchange-traded fund (ETF). The launch marks the first time […]<\/p>\n","protected":false},"author":1,"featured_media":33165,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":{"0":"post-33164","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/33164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/comments?post=33164"}],"version-history":[{"count":0,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/33164\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media\/33165"}],"wp:attachment":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media?parent=33164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/categories?post=33164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/tags?post=33164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}