Evaluating Meme Coins as Institutional Assets: A New Frontier in Digital Finance

The launch of the Rex-Osprey DOGE ETF (DOJE) on September 11, 2025, marks a watershed moment in the evolution of digital finance. As the first U.S. exchange-traded fund centered around a token with no inherent utility—Dogecoin, a cryptocurrency originally created as a “joke”—the product challenges traditional notions of asset legitimacy. This development raises critical questions: Can meme coins, long dismissed as speculative novelties, transition into institutional-grade assets? And what does this mean for the broader financial system?

Regulatory Innovation and the 1940 Act Framework

The DOJE ETF's approval bypassed the SEC's traditional 1933 Act process, which governs physical commodities or derivative-based products, and instead leveraged the Investment Company Act of 1940 frameworkDogecoin ETF Set to Go Live in the U.S. on Thursday^[1]. This regulatory shortcut mirrors the path taken by the Solana staking ETF ($SSK) and signals a growing willingness among regulators to accommodate novel digital assets. By sidestepping securities law, the SEC has effectively created a parallel classification for meme coins, treating them as commodities rather than investment contractsFirst US DOGE ETF to Begin Trading on Thursday^[2].

This approach, however, is not without controversy. Critics argue that the lack of a clear legal definition for meme coins leaves regulatory gaps. For instance, the SEC's August 2025 guidance explicitly stated that meme coins are “presumptively not considered securities,” but this classification does not address risks like market manipulation or hyperinflationary supply modelsDogecoin ETF Set to Go Live in the U.S. on Thursday^[1]. The DOJE ETF's success may hinge on whether this regulatory ambiguity proves to be a feature or a bug.

Market Reactions and the Power of Narrative

Dogecoin's price surged 17% in the weeks leading up to the ETF's launch, driven by a mix of retail enthusiasm and institutional curiosityDogecoin ETF Set to Go Live in the U.S. on Thursday^[1]. Santiment analyst Brian Q. predicted a 93% chance of approval during the week of the launch, further fueling optimismInfinite Supply and Meme Coin Dynamics^[4]. This reaction underscores the power of narrative in crypto markets: Dogecoin, once a symbol of internet humor, is now being framed as a “cultural asset” with institutional appealFirst US DOGE ETF to Begin Trading on Thursday^[2].

Yet the token's infinite supply—adding 5 billion coins annually—poses a fundamental challenge. Unlike Bitcoin or Ethereum, which have capped supplies, Dogecoin's inflationary model could dilute the impact of ETF inflows on its priceInfinite Supply and Meme Coin Dynamics^[4]. This dynamic raises questions about whether the DOJE ETF will act as a stabilizing force or exacerbate volatility in a market already prone to FOMO-driven swings.

Broader Implications for Digital Finance

The DOJE ETF is part of a broader wave of crypto ETF applications under review by the SEC, including proposals for tokens like TRUMP CoinDogecoin ETF Set to Go Live in the U.S. on Thursday^[1]. These developments reflect a growing trend of integrating culturally resonant tokens into regulated financial products. However, as the Brookings Institution noted in a recent report, the risks of crypto assets—including meme coins—extend beyond speculative investors. They can spill into retirement plans, banking infrastructure, and public investment, creating systemic vulnerabilitiesProtecting the American Public from Crypto Risks and Harms^[3].

Academic analyses further complicate the picture. A 2025 study on meme coins like $TRUMP and $MELANIA highlighted how these tokens blur the lines between investment and influence, raising concerns about conflicts of interest and political manipulationInfinite Supply and Meme Coin Dynamics^[4]. The lack of a harmonized regulatory framework means these tokens often exploit jurisdictional gray areas to operate with minimal oversight.

The Road Ahead

The DOJE ETF's launch is a bold experiment in financial innovation. If it succeeds, it could pave the way for a new class of institutional products centered around culturally driven assets. However, the absence of a clear regulatory framework and the inherent risks of infinite supply models mean that caution is warranted.

For now, the DOJE ETF serves as both a litmus test and a cautionary tale. It demonstrates the potential for meme coins to gain institutional legitimacy but also underscores the need for robust safeguards to protect investors and the broader financial system.