On Thursday, the first Dogecoin (DOGE) ETF is set to become available for trading in the US. What do we know about this new development, which marks the arrival of memecoins on the stock market?
The first Dogecoin DOGE ETF is coming
On Tuesday, Bloomberg ETF specialist Eric Balchunas posted a tweet explaining that the first US Dogecoin (DOGE) ETF is expected to launch for trading on Thursday:
In his message, the analyst explains that while issuers of other ETFs are generally regulated under the Securities Act of 1933, the Investment Company Act of 1940 has been favored here:
The era of memecoin ETFs is about to begin, with the planned launch of $DOJE on Thursday, albeit under the ’40 Act regime, in the manner of $SSK. A large number of supporters of the ’33 Act are still awaiting SEC approval. This is arguably the first US ETF to hold an intentionally useless asset.
The SSK referred to here is the REX-Osprey SOL + Staking ETF, launched in July, which offers exposure to Solana’s SOL while paying out staking rewards. In short, each law has its advantages and disadvantages, and while the ’33 Act is more suitable for unique assets, the ’40 Act can offer a faster regulatory path.
However, this model means that this DOGE ETF cannot be entirely spot. In a document filed with the Securities and Exchange Commission (SEC), issuers REX Shares and Osprey Funds, which distribute this product via Foreside Fund Services, explain that a portion of the cash will be invested in actual DOGE, but also in derivatives:
The Fund may also invest in derivatives, which are financial instruments whose value is derived from that of DOGE. These derivatives mainly include futures contracts. The Fund may also seek exposure to changes in the price of DOGE through swaps. Swap contracts are derivative contracts entered into primarily with financial institutions for a fixed term ranging from one day to more than one year.
In addition to DOGE, the same team also appears to be seeking approval for other ETFs, including some on other memecoins such as TRUMP and BONK:
Despite the news, the price of DOGE has not risen significantly. Over 24 hours, the asset has only risen by 0.1% to a price of $0.23. However, it is worth noting that it has risen by 11% since Sunday in response to investor anticipation.
Although such an ETF will be unprecedented, it will also have to convince the market, even though DOGE is still trading down 67% from its all-time high (ATH) on May 8, 2021. By way of comparison, the SSK, launched by the same team for SOL, currently has $230.6 million in assets under management.
