Dogecoin ETF Launches Today, Why It Was Approved Faster Than Bitcoin

The first U.S. dogecoin ETF is set to launch on Thursday, dividing opinions in the industry between those who call it a breakthrough for the legitimacy of community-driven cryptocurrency and those who dismiss it as speculation in a new wrapper. Unlike bitcoin ETFs approved under the Securities Act of 1933, Rex-Osprey Dogecoin ETF (DOJE) received approval under the Investment Company Act of 1940, a framework typically used for mutual funds and diversified ETFs.

BlackRock’s spot crypto fund, for example, simply holds bitcoin in custody with Coinbase. Instead, DOJE becomes more exposed through a subsidiary in the Cayman Islands and derivatives since the 1940 law requires diversification and limits concentration of individual assets.

The Securities Act of 1933 regulates the issuance of new securities and emphasizes strict registration and investor protection through detailed disclosures, which is why spot crypto ETFs have faced years of delays. On the other hand, the Investment Company Act of 1940 governs the operation of investment funds and how they manage investors’ assets, making it simpler and faster for regulators to approve products that fall under it, such as the new dogecoin ETF. This very difference explains why some crypto funds have come to market faster than spot ETFs that had to undergo a stricter process under the 1933 law.

The industry typically celebrates the debut of crypto ETFs, but critics argue that the memecoin fund institutionalizes speculation while charging fees that investors could avoid by buying dogecoin directly. Some also point out the irony that dogecoin, created as a joke, has leapfrogged projects with more tangible use cases to reach the ETF stage.

Is a Dogecoin ETF Necessary?

Dogecoin is a descendant of bitcoin. It was created in 2013 as a fork of Luckycoin, a fork of Litecoin, which is a fork of bitcoin. Although it started as a joke, it has since grown into the top 10 cryptocurrencies by market capitalization. Long accepted by small investors, dogecoin has also spawned a broader category of memecoins, often criticized for their casino-like nature. This makes its approval for an ETF particularly controversial. The ETF allows investors to gain exposure to dogecoin through the exchange, but not everyone sees the point.

– These ETFs charge fees, and you could simply create a Coinbase account in five minutes, buy the token, and never incur a cost ratio – said Brian Huang, co-founder and CEO of the crypto management platform Glider.

He added that institutional investors are more likely to favor ‘legitimate’ tokens that generate income.

Dogecoin has historically made some crypto investors millionaires. But its price is in a constant battle with inflation. Dogecoin’s tokenomics were designed as a satire of bitcoin’s scarcity. Instead of a cap of 21 million pieces, dogecoin is unlimited and issues a block reward of 10,000 dogecoins every minute. This means that about 5 billion new coins are produced annually. During past memecoin booms, analysts warned that such assets diverted capital and attention from more serious blockchain projects. Some believe that the ETF exacerbates this problem.

Dogecoin Does Not Open Crypto ETF for All

By the end of August, 92 crypto ETPs were awaiting decisions from the U.S. SEC. Dogecoin products were among them, along with other memecoin applications such as Pengu, a token associated with the NFT brand Pudgy Penguins. While some critics expressed frustration that memecoins are leading over more serious projects, others argue that its success reflects the dynamics of the crypto community.

Unlike many altcoins, dogecoin has often been in the spotlight. Tweets from Tesla CEO Elon Musk in 2021 led to a spike in its price, and a U.S. government department that once led even named itself the Department of Government Efficiency or DOGE. The token has also withstood multiple bear markets, giving it a level of resilience and maturity that other memecoins lack. On Tuesday, the SEC postponed its decision on the Bitwise dogecoin ETF, extending the review deadline to November 12.

Dogecoin ETF Blurs the Line Between Memes and Markets

The dogecoin ETF forces the industry to confront whether the acceptance of speculation and culture is part of the package. Skeptics argue that the new fund leans too much toward the latter. For some, the idea of wrapping a single token in an ETF is ‘ridiculous,’ akin to packaging a single stock as a diversified product. For them, the Wall Street ‘wrapper’ ETF does nothing more than institutionalize memes while charging investors fees that they could easily avoid by directly purchasing dogecoins.

Others counter that form is as important as function. They point out that the ETF does not change the code or purpose of dogecoin, but incorporates requirements for custody, audits, and disclosures that lend legitimacy to major investors. If a memecoin can become a regulated ETF, then ‘everything is on the table.’ This could open the door for adoption, as crypto continues to blur the line between revolutionary financial innovations and pure entertainment.

In that sense, DOJE does not answer the question of whether memes have a place in serious markets, but it shows that regulators and investors are willing to treat them as if they belong. Rex-Osprey has more memecoin ETFs in the pipeline, and SEC documentation describes products related to trump and bonk, along with xrp and solana.