Dogecoin ETFs encourage the cryptocurrency industry to embrace speculation

Dogecoin started out as a “joke,” but its ability to have its own ETF today is undoubtedly a significant milestone in the history of the crypto industry. However, the launch of this first US-based Dogecoin ETF has also sparked various opinions. Some see it as an important step towards crypto assets becoming part of mainstream finance, while others worry that it merely institutionalizes speculation. Regardless of the views, this event forces us to reconsider the boundaries between traditional finance and the crypto world.

The first US-based Dogecoin Exchange-Traded Fund (ETF) will be launched on Thursday. There are differing opinions among industry experts. Some view it as a breakthrough in legitimizing crypto assets within the community, while others see it as just another form of speculative behavior in a new guise.

Unlike the Bitcoin ETF approved under the Securities Act of 1933, the Rex-Osprey Dogecoin ETF is authorized by the Investment Company Act of 1940. This law is typically used to regulate funds and diversified ETFs.

For example, BlackRock’s spot crypto fund only holds Bitcoin, which is managed by Coinbase. Since the 1940 law requires diversification and limits concentration of assets in any single asset class, DOJE utilizes its subsidiary in the Cayman Islands and derivatives to manage its exposures.

The introduction of cryptocurrency ETFs is usually met with enthusiasm in the industry. However, critics argue that these funds institutionalize speculation, while also imposing costs on investors who could have avoided them by purchasing Dogecoin directly. Some also point out that it’s ironic that Dogecoin, which was originally just a joke, has now surpassed other projects with more practical applications and entered the ETF phase.

Dogecoin’s value increased before it was listed as an ETF in the United States. Source: CoinGecko

Do we really need Dogecoin ETFs?

Dogecoin is a descendant of Bitcoin. It was created in 2013 as a fork of Luckycoin, which in turn was a fork of Litecoin, which is another fork of Bitcoin. Although it started out as just a joke, it has now become one of the top ten most valuable cryptocurrencies.

Dogecoin has long been popular among retail investors, and it has also given rise to a variety of memecoin projects. However, its casino-like nature has often been criticized. This makes the approval of its ETF particularly controversial.

Dogecoin ETF will be listed on Thursday, while those applying for spot cryptocurrency ETFs are still waiting to see how things develop. Source: Eric Balchunas

ETFs allow investors to access Dogecoin through the stock market. But not everyone understands this concept.

Brian Huang, co-founder and CEO of the encryption management platform Glider, told Cointelegraph, “These ETFs charge extremely high fees. In fact, it only takes five minutes to create an account on Coinbase, purchase tokens, without having to pay any fees at all.” He added that institutional investors are more likely to prioritize “legal” tokens that can generate revenue. Dogecoin has even turned some cryptocurrency investors into millionaires throughout its history. However, its price has always been challenged by inflation. The token economics of Dogecoin aim to mock the scarcity of Bitcoin. The maximum issuance limit for Dogecoin isn’t 21 million units, but rather unlimited. Every minute, 10,000 Dogecoin rewards are issued, meaning approximately 5 billion new coins are created each year. Dogecoin plays around on the obsession of Bitcoin fans towards scarcity. Source: Dogecoin Foundation

During past memecoin hype cycles, analysts warned that such assets could dilute funds and distract from more serious blockchain projects. Some believe that this ETF exacerbates this problem.

Douglas Colkitt, a founding contributor to the first-layer blockchain Fogo, told Cointelegraph, “It’s crazy to see memecoin getting ahead of serious projects and reaching the stage of being listed as ETFs.”

“The listing of these ETFs doesn’t change the fundamentals of the situation. It simply allows Wall Street to manipulate Dogecoin prices without any reaction from the market.”

Dogecoin will not approve cryptocurrency ETFs

截至 8 月底，已有 92 个加密货币 ETP 正在等待美国证券交易委员会(SEC)的审批 。其中包括狗狗币产品，以及其他一些模因币应用，例如与非同质化代币(NFT)品牌 Pudgy Penguins 挂钩的代币 Pengu。

Incyt 首席执行官兼创始人 Mike Maloney 表示：“狗狗币最初可能只是一个玩笑，但它如今已成为一种真正的山寨币，吸引了真正的投资者和工程师进入这个领域。社区参与对于一枚代币来说，就像对于一只股票一样重要。”

美国加密 ETP 申请名单持续增长。来源： James Seyffart

虽然像科尔基特这样的批评者对模因币抢先于更严肃的项目感到沮丧，但其他人则认为，它的成功反映了加密货币社区的活力。FG Nexus 数字资产首席执行官玛雅·武吉诺维奇 (Maja Vujinovic) 告诉 Cointelegraph，狗狗币超越其他山寨币，表明了社区如何将资产推向受监管的结构。

“如果狗狗币是第一个，那么它的意义不在于技术路线图，而在于承认社区本身可以将资产推入受监管的结构。这是一个重要的信号，表明监管机构对社会动能的响应与对市值的响应一样强烈。”她说道。

与许多山寨币不同，狗狗币经常成为主流关注的焦点。特斯拉首席执行官埃隆·马斯克在 2021 年的推文使其价格飙升 ，他曾经领导的一个美国政府部门甚至被称为“政府效率部”(简称 DOGE )。该代币也经历了多次熊市，使其具备了其他模因币所缺乏的韧性和成熟度。

马斯克在 2021 年的一档喜剧短剧中称狗狗币是“骗局”。来源： 《周六夜现场》

“ETF 的路径不会是自由的;流动性、监控和托管准备度仍然是门槛。但更多代币将进入受监管的包装，从而扩大其应用范围，”Vujinovic 补充道。

周二，美国证券交易委员会推迟了对 Bitwise Dogecoin ETF 的决定 ，将审查窗口延长至 11 月 12 日。

狗狗币 ETF 模糊了模因与市场之间的界限

狗狗币 ETF 迫使业界思考是否应该拥抱投机和文化。

怀疑论者认为，新基金过于偏向后者。黄先生认为，将单一代币包装成 ETF 的想法“荒谬至极”，相当于将一只股票包装成多元化产品。在他看来，华尔街的包装只不过是将一个模因制度化，同时向投资者收取费用，而这些费用他们可以通过直接购买狗狗币轻松避免。

Others argue that both form and function are equally important. Vujnović pointed out that ETFs won’t change the code or purpose of Dogecoin, but they do introduce additional requirements for custody, auditing, and disclosure, thereby enhancing the legitimacy of Dogecoin among mainstream investors.

Kolkit believes that this development is both promising and ironic. If memecoin ETFs can become regulated entities, then “anything is possible.” This could potentially open up the door for cryptocurrencies to gain wider acceptance, but it also highlights how it’s possible for cryptocurrencies to continue blurring the lines between groundbreaking financial innovations and pure entertainment.

In this sense, the Department of Justice hasn’t determined whether memecoin should be considered a “serious market” or not, but it does indicate that regulators and investors are willing to treat them as if they were serious markets.

Rex-Osprey is working on developing more memecoin ETFs. The SEC documents outline products related to Trump, such as TRUMP, BONK Bonker, as well as altcoins like XRP and Solana.