Dogecoin ETF: Speculation or Mainstream Crypto?
Dogecoin ETF Launches Amidst Industry Debate
The first US Dogecoin (DOGE) exchange-traded fund (ETF), Rex-Osprey Dogecoin ETF (DOJE), is set to launch this Thursday, triggering mixed reactions within the crypto community. Some view it as a significant step towards mainstream acceptance, while others dismiss it as pure speculation wrapped in a new financial product.
Unlike Bitcoin ETFs approved under the Securities Act of 1933, the DOJE gained approval under the Investment Company Act of 1940, a framework typically used for mutual funds. This means DOJE gains exposure through a Cayman Islands subsidiary and derivatives because the 1940 act requires diversification, restricting single-asset concentration, unlike BlackRock's spot Bitcoin fund, which directly holds BTC in Coinbase custody.
While crypto ETF launches are often celebrated, critics argue that a memecoin fund institutionalizes speculation. They also point out that investors could avoid the ETF's fees by simply buying Dogecoin directly. The irony of Dogecoin, initially created as a joke, surpassing projects with more substantial use cases to reach the ETF stage is not lost on some.
The Need for a Dogecoin ETF Questioned
Dogecoin, a descendant of Bitcoin created in 2013 as a joke, has grown into a top-10 cryptocurrency by market capitalization. Its popularity among retail traders has also given rise to the memecoin category. However, its ETF approval raises concerns about legitimizing a casino-like asset.
“These ETFs are charging off-the-charts fees when you could simply create a Coinbase account in five minutes, buy the token and never be charged an expense ratio,” said Brian Huang, co-founder and CEO of crypto management platform Glider.
Huang added that institutional investors are more likely to prioritize “legitimate” and revenue-generating tokens.
Dogecoin's tokenomics, designed as a satire of Bitcoin’s scarcity, involve an unlimited supply with 5 billion new coins minted yearly.
Some analysts worry that the ETF could divert capital from more serious blockchain projects.
“It’s wild to see a memecoin front-run serious projects to the ETF finish line,” said Douglas Colkitt, a founding contributor at layer-1 blockchain Fogo. “An ETF wrapper doesn’t change the fundamentals; it just lets Wall Street pump DOGE with a straight face.”
Limited Implications for Crypto ETF Approvals
Despite the buzz, a Dogecoin ETF doesn't automatically pave the way for other crypto ETFs. In the US, as of late August, 92 crypto ETPs were awaiting SEC decisions. These included other memecoin applications like Pengu.
Mike Maloney, CEO and founder of Incyt, argues that Dogecoin has evolved into a serious altcoin with real investors and engineers. “Community engagement is as real for a coin as it is for a stock,” he said.
Maja Vujinovic, CEO of Digital Assets at FG Nexus, believes Dogecoin's success is less about technical roadmaps and more about the power of community.
Unlike many altcoins, Dogecoin has often been in the mainstream spotlight. Elon Musk's tweets in 2021 significantly impacted its price.
Vujinovic added that while the ETF pathway won’t be a free-for-all, more tokens will find their way into regulated wrappers, which broadens adoption.
The SEC recently delayed its decision on the Bitwise Dogecoin ETF, extending the review window to Nov. 12.
Memecoin or Market?
The Dogecoin ETF forces the industry to consider whether embracing speculation is part of crypto's nature.
Skeptics argue that the new fund is too speculative. Brian Huang considers wrapping a single token in an ETF as “ridiculous.”
Others contend that the ETF adds legitimacy for mainstream investors through custody, audits, and disclosure requirements.
Colkitt views the development as both promising and a parody. If a memecoin can make it into a regulated ETF, then “anything is on the table.”
Rex-Osprey has additional memecoin ETFs in development, including those tied to Official Trump (TRUMP) and Bonk (BONK), along with altcoins XRP and Solana.