Understanding the Dogecoin ETF: How TDOG Allows Investment Without Holding DOGE

21Shares has recently launched the Dogecoin exchange-traded fund (ETF), known as TDOG, which appears on the DTCC’s Active and Pre-Launch list under the ticker TDOG. While this listing indicates that brokers and clearing institutions are preparing for trading, it does not imply that the fund has received regulatory approval.

What is TDOG, and how does it work?

The TDOG fund is designed to be physically backed by Dogecoin, meaning it will hold the cryptocurrency directly and issue shares that are intended to track the price of DOGE (minus fees). The fund calculates its daily net asset value (NAV) using a multi-exchange Dogecoin price index and provides an intraday indicative value approximately every 15 seconds to help traders understand the alignment between shares and the underlying asset.

Note: Creations and redemptions generally occur in cash.

Authorized participants (AP) are expected to provide cash, which is then used by the prime broker (Coinbase) to either purchase DOGE or utilize existing holdings, transferring them to Coinbase Custody Trust Company for safekeeping. The reverse process applies to redemptions. Generally, market makers and APs help keep the share price aligned with NAV, although minor premiums or discounts may still occur during high volatility or low liquidity periods.

Important Considerations

Fees are paid in kind, signaling a gradual decline in the amount of DOGE per share over time as sponsor fees are deducted.
Without the required approvals from the US Securities and Exchange Commission (SEC), TDOG will not begin trading. The listing from DTCC indicates operational setup, not regulatory clearance.

Fact: “Pay in kind” for the TDOG means that the sponsor’s fee will be taken from DOGE instead of cash, leading to a gradual decrement in the total supply of Dogecoin backing each share, despite the price tracking DOGE’s market value.

DTCC Listing vs SEC Approval

Having TDOG listed with DTCC means preparations are ongoing, allowing brokers and clearing firms to map the ticker and perfect their systems. However, this pre-launch status is not eligible for DTCC processing, nor does it enable trading on exchanges or imply regulatory approval. For TDOG to commence trading, two key approvals from the SEC are necessary:

The S-1 must be declared effective.
Nasdaq’s 19b-4 must clear to list the shares.

Similar crypto funds have been seen on DTCC before launching, making this step indicative of operational readiness without approval.

How TDOG Would Track DOGE

If granted approval, TDOG would evaluate its holdings based on CF Benchmarks’ Dogecoin-Dollar US Settlement Price from executed trades across several qualified DOGE-USD venues. This system is designed to be replicable and robust against manipulation, administered under UK standards for benchmarks. The NAV is defined daily by this pricing metric; however, it’s essential to note that the benchmark does not factor in forks or airdrops. According to the fund’s prospectus, any airdropped assets are disclaimed, and forked coins will not be included unless specifically supported and distributed.

Thus, investors should not anticipate any value derived from forks or airdrops affecting the fund’s valuation.

Comparing TDOG and Direct DOGE Purchases

Purchasing DOGE directly could indeed be a simpler route, depending on your goals. If approved, TDOG would allow investors to gain exposure to Dogecoin through a standard brokerage account without needing to manage the actual cryptocurrency themselves. The trust would hold DOGE, base its share valuation on CF Benchmarks’ daily index, and execute cash creations/redemptions via Coinbase.

However, investors should consider that the sponsor fee, taken in DOGE, will lead to a gradual reduction in the DOGE backing each share. The convenience of TDOG lies in its operation similar to any ETF, eliminating the need for wallets or seed phrases. By effectively utilizing institutional custody and following a published rule set for valuation, TDOG helps keep trading prices close to NAV through the mechanisms of creation and redemption.

The trade-offs include dependence on third parties such as the prime broker, custodian, and index administrator, and the forfeiture of on-chain utility, which means that direct interactions with Dogecoin (like tipping or spending) would not be possible through this ETF.

In contrast, buying DOGE directly provides complete control over the assets, including the capability to engage actively with cryptocurrency while managing risks and responsibilities associated with exchanges.

TDOG’s Position Alongside DOJE

Currently, the REX-Osprey DOGE ETF (DOJE) trades in the US on Cboe BZX. This 1940-act ETF targets to deliver similar performance (before fees) and may consist of a blend of spot Dogecoin exposure and DOGE-linked instruments. For regulatory compliance, DOJE is structured via a Cayman subsidiary that holds cryptocurrency assets.

Its expense ratio stands at 1.50%. Since its listing on September 18, 2025, DOJE has provided access to both spot DOGE and the 21Shares DOGE ETP, with changing levels of exposure over time.

If TDOG secures the necessary approvals, it will present an alternative investment avenue beside DOJE, with different operational frameworks and fee structures. Ultimately, both would cater to distinct investor profiles and preferences regarding DOGE exposure.

Did you know? A grantor trust, like TDOG, differs from a 1940-act ETF like DOJE in terms of tax and portfolio regulations, with the trust providing direct asset exposure while the ETF can utilize baskets to ensure compliance with regulations.

Final Thoughts on Purchasing TDOG

Should both the S-1 registration and Nasdaq’s 19b-4 rule amendment gain SEC approval, TDOG will begin trading on Nasdaq. Investors can then:

Search for the ticker in their brokerage account: Once mapped, TDOG will appear listed with other Nasdaq ETFs, although availability may vary by broker.
Utilize an eligible account: Most standard brokerage accounts support ETF investments, but certain tax-advantaged or institutional accounts might feature extra limitations.
Carefully execute orders: Early trading days typically exhibit wider spreads and lesser liquidity; thus, using limit orders is recommended.
Be informed of costs: Your total expenses will include brokerage fees (often zero), bid-ask spreads, plus the fund’s ongoing sponsor fee.

Until the necessary approvals are received, TDOG isn’t available for trading. For current DOGE exposure, you can explore DOJE through your broker, considering the regulations and personal situations applicable in your jurisdiction.