What You Need to Know:

• The Rex Shares-Osprey Dogecoin ETF (DOJE) might launch Thursday, set to become the first U.S. ETF focused on a meme coin.
• DOJE will provide futures-based exposure to DOGE through a subsidiary in the Cayman Islands, rather than offering direct ownership of the cryptocurrency.
• If successful, this could lead to more meme coin ETFs, merging internet culture with traditional finance.

Building Anticipation for the ETF

The first exchange-traded fund (ETF) specifically designed for a meme coin is on the verge of hitting the market this week, following delays and considerable speculation. The DOGE ETF, officially known as the Rex Shares-Osprey Dogecoin ETF (DOJE), was initially expected to debut last week, along with other politically-themed and crypto-related ETFs linked to tokens such as Bonk, XRP, and Bitcoin. However, its introduction did not happen as planned.

Bloomberg ETF analysts Eric Balchunas and James Seyffart currently regard Thursday as the likely launch date, though they caution that this is not guaranteed. “It’s more likely than not,” said Seyffart, “that seems like the base case.”

Ahead of the ETF’s launch, DOGE has performed well, boasting a 15% increase over the past month, despite a recent 3.5% drop in the last 24 hours.

Significance of the DOJE ETF

If it launches, DOJE will represent a groundbreaking move as the first U.S. ETF that targets a meme coin – tokens commonly criticized for lacking utility or a clear economic purpose. These include cryptocurrencies like Dogecoin, Shiba Inu, and Bonk, which often see dramatic swings in popularity spurred by internet trends and celebrity endorsements.

Balchunas noted the ETF’s importance in a tweet on X: “First-ever U.S. ETF to hold something that has no utility on purpose.”

It’s crucial to understand that DOJE is not a spot ETF; it will not directly hold DOGE but will utilize a Cayman Islands branch to access futures and derivatives, bypassing the necessity for physical custody of the token while allowing traders to speculate on its performance within a traditional brokerage framework.

The ETF received approval this month under the Investment Company Act of 1940, typically applied to mutual funds and diversified ETFs, distinguishing it from the recent wave of bitcoin ETFs approved under the Securities Act of 1933, which generally pertain to commodity-based assets. Essentially, DOJE mirrors mutual funds more than commodity trusts.

Future Developments

More direct exposure options could soon materialize. Numerous firms have submitted applications for spot DOGE ETFs, intending to hold the meme coin rather than merely relying on derivatives. The U.S. Securities and Exchange Commission (SEC) is currently reviewing these applications and is reportedly becoming increasingly at ease with crypto ETFs, having approved several bitcoin products in early 2024.

This year’s broader crypto landscape has underscored that investor demand can surpass fundamental skepticism. Simultaneously, while meme coins often undermine their value, their capacity to attract billions in speculative investments continues unabated.

Seyffart asserted that the ETF market will likely reflect a similar trajectory: “There’s going to be a bunch of products like this. They’re going to come to market, whether you love it or not.”

He remarked that many current financial products lack a deeper use, serving primarily as vehicles for speculative trading. With an audience in crypto, it is conceivable that these products will resonate in both the ETF and traditional finance realms.

Whether the DOJE ETF paves the way for more meme coin investment opportunities or simply validates the viability of such concepts, its reception this week remains crucial, marking a pivotal point in the convergence between internet culture and conventional finance.