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 that US investors are able to bet on memecoins—which serve no purpose and promise no utility—through a traditional brokerage, without handling crypto directly.
ETFs are designed to track the price of an underlying asset—whether metals, gold, or crypto. Loosely, for every dollar invested in an ETF, the operator stockpiles a dollar’s worth of the asset, earning a fee as a percentage of the fund’s total value.
“If you ignore stablecoins, dogecoin is the sixth largest [cryptocurrency] by market cap in the world,” Greg King, CEO and founder of REX and Osprey tells WIRED. “It’s really just following the demand that’s already out there in the native crypto space and providing access via a regulated vehicle.”
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. “People obviously want to trade it,” says Seyffart.
But it’s 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.
“I still don’t really understand why a memecoin should be in an ETF wrapper to begin with,” says Bryan Armour, director of ETF and passive strategies research for North America at investment research firm Morningstar. “Something started as a joke with a Shiba Inu as its character—why should that be a part of capital markets?”
Before regulators at the Securities and Exchange Commission approved the first US-listed bitcoin ETFs in January 2024—only after the courts had forced the agency’s hand—members of the crypto industry had fought for more than a decade for permission to package coins into funds.
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.
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.
“By 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,” said SEC chair Paul Atkins. “This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets.”
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’s 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—like Coinbase Derivatives—that participates in the Intermarket Surveillance Group, a network of organizations that monitors for fraudulent activity, would automatically qualify for the ETF treatment.
“It’s a spaghetti cannon. They’re going to cook up all these ETFs—whether levered versions, inverse, or pure spot exposure—and they’re going to frickin shoot this cannon at the wall and see what sticks,” says Seyffart. “That’s what these ETF issuers do.”
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.
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. “With a memecoin, it would be hard for a financial advisor to feel comfortable buying that for a client,” says Armour.
One’s stance on the prospect of memecoin ETFs coming to market in droves might depend on personal politics.
“I’m very much libertarian in the way the SEC should be operating…The SEC’s job is not to be a merit regulator. Its job is to be a disclosure regulator,” says Seyffart. “I personally don’t own or trade any memecoins and probably won’t own any memecoin ETFs. But it’s a free market. People can do what they want.”
Others, including Armour, believe it’s the joint responsibility of regulators, issuers, and investors to ensure that public markets aren’t polluted with assets likely to inflict large and sudden losses.
“Does the SEC approving putting it into an ETF make people who don’t know what these things are think they are more legitimate?” asks Armour. “It pulls more attention and assets towards speculation, which typically is not a good long-term strategy for investors,” he claims.
The SEC declined to comment.
In King’s 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 “primarily view it as providing access to investments that already exist,” says King. “[If there’s] investor demand, it’s something we’ll consider launching.”
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.
“We just play by the rules,” says King. “The lines have been drawn…by the administration.”
