DOGE ETF To Launch as First US Fund to Hold Asset With 'No Utility'

In brief

Bloomberg analyst Eric Balchunas calls Rex-Osprey DOJE the first US ETF to hold an asset with “no utility on purpose.”
ETF filed under the Investment Company Act of 1940 instead of the Securities Act of 193, like other crypto ETF filings.
Initial institutional adoption is initially, but market cap growth could attract attention, Decrypt was told.

A first-of-its-kind Dogecoin exchange-traded fund is set to hit U.S. markets on Thursday, with Bloomberg’s Eric Balchunas flagging the Rex-Osprey Doge ETF (ticker: DOJE) as the launch vehicle.

“Pretty sure this is first-ever U.S. ETF to hold something that has no utility on purpose,” Balchunas tweeted Tuesday, announcing the fund’s debut.

The fund is expected to list using the Investment Company Act of 1940 framework that REX-Osprey previously used for its SOL + Staking ETF (SSK), rather than the Securities Act of 1933 path used by commodity-style grantor trusts.

Ganesh Mahidhar, investment professional at Further Ventures, told Decrypt that “ETFs under the Investment Company Act of 1940 have mandates around diversification and more governance requirements broadly, as compared to those launched under the 1933 securities act.”

“In a way, regulating it under the 1940 act provides more investor protection and imposes a registered investment structure on the SPV offering it,” he added.

He explained this framework “demarcates the ETF as being more similar to stock and bond ETFs as compared to the BTC ETF, which resembles a commodity ETF.”

However, the meme coin classification raises questions about whether similar approvals await other similar cryptos.

Dogecoin “follows the proof of work consensus, same as BTC,” and “has a floor in terms of the power being consumed to produce it,” Mahidhar noted.

“This separates Dogecoin from Shiba Inu and Pepe, which run on proof of stake and ‘don’t have the same baseline,’ making them more vulnerable due to ‘lack of utility,’ though Mahidhar noted app-chain and layer-2 projects could still push gaming or gambling use cases.”

Institutional portfolios are “unlikely to touch the ETFs at this stage,” but if their market cap becomes significant, “there is a possibility that some attention goes to them,” he said.

“What matters more is their price action and volatility in this case, and an eventual utility if such does happen,” the investment professional added.

The listing comes as over 90 crypto ETF proposals await SEC decisions, including pending applications for Solana and XRP funds with deadlines extending into October.

REX Shares has also filed for multiple crypto ETFs in January, including Trump, BONK, and additional Dogecoin products, just days after Gary Gensler departed from the SEC.

On the crowded SEC docket, Mahidhar added he’s a “firm believer” that ETFs are the universal wrapper and sees no reason “any such ETF should not be accepted” as markets migrate from cash-flow to liquidity-based value concepts.

DOGE is changing hands for around $0.24, up 1.4% on the day and 11.7% on the week, according to CoinGecko.