Original Title: "Sculpting Speculation"

Original Author: Thejaswini M A

Original Source: Token Dispatch
Original Translation: Luffy, Foresight News

The birth of Exchange-Traded Funds (ETFs) originated from a crisis. In 1987, on "Black Monday," the Dow Jones Industrial Average plummeted over 20% in a single day. Regulators and market participants realized they needed more reliable investment tools. Mutual funds could only be traded at the end of each day, leaving investors powerless during market panics.

ETFs emerged as a key solution. This "basket of securities" could be traded like individual stocks, providing instant liquidity during market turmoil.

ETFs simplified index investing, offering broad market exposure at a low cost advantage. Their original design principle was "hands-off, highly transparent," merely tracking an index rather than attempting to outperform it. The first successful ETF launched in 1993—the S&P 500 Index ETF—promised "precise tracking of the S&P 500" and became the world's largest fund.

The initial ETF was a pure stroke of genius. If you wanted to invest in the "entire stock market" without researching individual stocks or paying high management fees for a fund manager to do it for you, it was the optimal choice.

A Paradigm Shift: Memecoin ETF Enters the Stage

In September 2025, Wall Street crossed a new threshold: packaging Memecoin into a regulated investment product and charging a 1.5% annual fee for it.

ETFs have evolved from a "tool for simplifying investment" to a "complex vessel that can package any strategy." The possibilities for portfolios, hedging, timing, and other investment methods are endless, yet the number of tangible companies available for investment is limited.

Today, the number of ETFs in the U.S. market has exceeded 4,300, while the number of publicly traded companies is approximately 4,200. The proportion of ETFs in all investment tools has increased from 9% a decade ago to 25%, marking the first time in market history that "the number of funds exceeds the number of stocks."

This has given rise to a fundamental problem: rather than empowering investors, choice overload has paralyzed them. Today's funds cover every thinkable theme, trend, and even political stance. The line between serious long-term investment and entertainment-driven speculation has become completely blurred, making it nearly impossible to distinguish between a "product designed for wealth accumulation" and a "product designed to ride a trend."

Hold on a second... This anxiety is completely missing the point; a Dogecoin ETF is not a distortion of the cryptocurrency mission.

For 15 years, cryptocurrency has been doubted as "valueless virtual currency." Traditional finance labeled us as "speculators obsessed with worthless tokens," asserting that we could never build anything real, would not receive institutional approval, and did not deserve serious regulatory treatment.

And now, they are trying to extract value from our "playfully created assets."

The crypto industry has created a new value category that traditional finance cannot ignore, cannot kill, and ultimately cannot stay aloof from. Dogecoin being able to have its own ETF before over half of the Fortune 500 companies is the strongest proof of cryptocurrency culture's dominance.

Alright, enough celebration talk; let's seriously examine the nature of this victory.

Why Would Someone Pay a 1.5% Fee for Something They Can "Buy for Free"?

The economic logic of a Memecoin ETF makes no sense to investors but is all too reasonable to Wall Street.

You can buy Dogecoin directly on Coinbase in just 5 minutes, with no ongoing fees. On the other hand, the REX-Osprey Dogecoin ETF offers the same exposure but charges a 1.5% annual fee. Keep in mind that the fee for a Bitcoin ETF is only 0.25%. Why would someone be willing to pay 6 times the cost of "digital gold" for a Memecoin?

The answer reveals the true target customers of such products. The Bitcoin ETF caters to institutional investors and experienced wealth managers who need to comply with regulations but understand cryptocurrency. They compete on fees because their clients have other options and know how to use them.

The Memecoin ETF, on the other hand, targets the "saw Dogecoin trending on TikTok but don't know how to buy it directly" retail investors. What they are paying for is not market exposure but convenience and legitimacy endorsement. These investors do not price compare; they just want to click "Buy" in their Robinhood App and get a taste of the meme hype they often hear about.

The issuer is well aware of how absurd this is and knows that customers could buy Dogecoin cheaper elsewhere. They are betting that most people won't realize this or won't bother to deal with cryptocurrency exchanges and wallets. The 1.5% fee is essentially a tax on financial illiteracy disguised as institutional legitimacy.

What Assets Deserve an ETF?

The traditional ETF definition is: "A regulated investment fund that holds a diversified portfolio of securities, trades on an exchange like a stock, provides broad market exposure, and adheres to professional oversight, custody standards, and transparent reporting mechanisms."

In a classic model like an ETF tracking the S&P 500, it holds hundreds of stocks across multiple industries; even sector-specific ETFs (such as Technology, Healthcare) cover dozens of related stocks. They achieve risk reduction through diversification while capturing market trends.

Now, looking at Dogecoin's essence: In 2013, someone copied the Litecoin code, added a meme dog logo, and created a cryptocurrency purely for ironic purposes. It has no development team, no business plan, no revenue model, and no technological innovation; it mints an additional 5 billion tokens each year, deliberately designed in an inflationary model only to mock Bitcoin's scarcity.

This token serves no economic purpose: it cannot have applications built on it, it cannot be staked for interest, its sole function is to exist as an internet meme, occasionally pumped due to celebrity tweets.

What Regulatory Loophole Has Enabled All of This?

The listing journey of this product has exposed the true playbook of "financial innovation": technically compliant with legal texts but circumventing regulatory arbitrage around the spirit of the law.

The REX-Osprey Dogecoin ETF (ticker: DOJE) did not list under the regulatory framework of the 1933 Securities Act for commodity ETFs but instead opted for the 1940 Investment Company Act, and this choice is crucial. Under the 1940 Act, if the SEC does not raise objections, the application automatically receives approval after 75 days, acting as a regulatory shortcut. However, the issue lies in the fact that this act was originally designed for "mutual funds investing in diverse assets," not "a speculative tool for a single memecoin."

To meet the requirement for diversified investments, DOJE cannot directly hold Dogecoin but instead gains exposure through derivatives via a Cayman Islands subsidiary, with related holdings not exceeding 25% of the assets. This leads to an absurd outcome: a Dogecoin ETF can have at most 25% of its assets linked to Dogecoin.

It fundamentally changes how investors actually own the asset. An ETF holding the asset directly can precisely track the price, while one using derivatives through an offshore subsidiary introduces tracking errors, counterparty risks, and complexity, causing the fund's performance to deviate from Dogecoin's actual trend.

This regulatory workaround has also brought about transparency issues: Retail investors buying Dogecoin ETFs are looking to directly participate in the social media-driven meme craze, but what they actually end up buying is a "complex derivative portfolio": Three-quarters of the investment has no correlation with Dogecoin price movements, and the returns will be diluted by the remaining 75% of the fund's holdings.

Furthermore, this structure completely contradicts the original intent of the 1940 Act. Congress established diversification rules to reduce risk through multi-asset allocation; yet, Wall Street has used these rules to package high-risk speculation as regulated products, circumventing the intended regulatory oversight. Instead of protecting investors from risk, the regulatory framework has used "institutional legitimacy" to mask new risks.

Contrast this with a Bitcoin ETF. Most Bitcoin ETFs (such as ProShares BITO or Grayscale Bitcoin Trust) operate under the 1933 Securities Act or other commodity pool frameworks, allowing for direct exposure to Bitcoin (either physically or through futures) without adhering to a 25% holding limit; they typically hold futures contracts directly or seek Bitcoin custody (once approved), enabling a more precise tracking of Bitcoin prices.

The Dogecoin ETF represents a perfect storm of regulatory arbitrage. An ETF holding an "asset that is primarily not intended for investment" that holds assets "publicly stated to serve no purpose," all listed under the guise of the 1940s-era Act meant to prevent such speculation. This is the epitome of financial engineering's cynicism, exploiting regulatory loopholes to create speculative products under the pretense of investor protection.

Why the Obsession with Yield?

Wall Street has ceased pretending to care about fundamentals and is now relentlessly pursuing yield regardless of asset quality.

Data from Downside Bank shows that institutional portfolios are significantly overallocated to equities, reaching the highest levels since 2008. Investors are pouring into options income ETFs promising monthly returns, high-yield junk bonds, and cryptocurrency yield products offering double-digit returns through derivatives.

Funds always chase yield first and ask questions later. As interest rates rise, investors swiftly pivot from safe investment-grade bonds to high-yield corporate bonds; thematic ETFs around AI, cryptocurrency, and meme assets are being launched at a record pace, catering to speculative demand rather than long-term value.

Risk appetite indicators are all in the green. Despite a macro environment filled with uncertainty, the volatility index (VIX) remains low; following the early 2025 market volatility, defensive sectors briefly attracted funds, only for the flow to quickly return to high-risk, high-return sectors like industrials, tech, and energy.

Wall Street has basically come to the consensus that in a world of unlimited liquidity and constant innovation, yield is above all. As long as something can provide excess returns, investors will find a reason to buy, disregarding fundamentals or sustainability.

Are We Creating a Bubble?

What happens when the number of investment products exceeds the actual investable assets?

We have crossed the threshold where the "Number of ETFs exceeds the Number of Stocks," a fundamental change in market structure. Essentially, we are "creating a synthetic market on top of the real market," with each layer adding costs, complexity, and potential failure points.

Matt Levine has pointed out: "As ETFs become more popular, technology lowers their implementation costs, and more trades that used to be bespoke will become standardized ETFs. The potential number of trading strategies, far more than the number of stocks... In the long run, the potential market for ETFs is limited by the infinite number of trading strategies, not by the dwindling number of stocks."

The Memecoin ETF phenomenon has accelerated this trend. Rex-Osprey has filed for TRUMP Coin ETF, Bonk Coin ETF applications, along with traditional crypto assets ETFs like XRP, Solana; the SEC currently has a backlog of 92 cryptocurrency ETF applications. The successful listing of each product will drive demand for the next, regardless of whether its underlying asset has any practical use.

This mirrors the 2008 subprime crisis: back then, Wall Street repackaged derivatives into new derivatives until financial products were completely detached from underlying assets; now we have just replaced "mortgages" with "attention and cultural phenomena."

The market appears to be more liquid than it actually is because there are multiple products trading around the same underlying asset. However, when a crisis hits, these products will move in tandem, and the so-called liquidity will evaporate instantly.

What Do Memecoin ETFs Mean?

A deeper story is: finance has evolved into a "comprehensive attention-capturing mechanism," where anything that can cause price fluctuations can be monetized.

The listing of an ETF reinforces itself through network effects. In the month before DOGE's listing, Dogecoin's price rose by 15% due to the "institutional money entering" expectation; price increases attract more attention, which in turn breeds more memes, enhances cultural influence, rationalizes more financial products, and success will foster imitation.

Traditional finance monetizes productive assets, such as factories, technology, and cash flow; modern finance can monetize anything that can move prices, such as narratives and memes. The ETF, this packaging shell, turns cultural speculation into institutional products, extracting fees from the community that initially created these phenomena.

The more fundamental question is: Is this innovation or plunder? Financializing Meme, has it created new value, or has it merely extracted value from a spontaneous cultural movement by layering institutional costs?

Internet culture has already created tremendous economic value: advertising revenue, peripheral sales, platform traffic, creator economy...

I have been contemplating what is driving the valuations of these companies to reach tens of billions of dollars by 2025. I even recently ordered matcha from the Mitico coffee roastery in Bangalore; not because I like the taste of this green powder, but because matcha has become a ritualistic symbol of "efficiency and serene luxury," making me feel like I'm part of a global health aesthetic.

This is the current state of internet culture: a series of "participation fees" disguised as lifestyle choices. And monetization opportunities are everywhere, ranging from the absurd to clever innovations, encompassing everything.

Take the hot topics of 2025, for example. The Coldplay band's "kiss cam" incident turned an awkward moment between two people into a corporate resignation scandal, Gwyneth Paltrow inexplicably became a "temporary spokesperson"; the entire internet debated whether "100 men can defeat a gorilla"; the Labubu blind box craze turned a $30 collectible into a "symbol of identity that people fight over in stores."

Then there's the language barrier I can never overcome. Gen Z slang updates too quickly. Last week someone said my outfit was "bussin," and I truly don't know whether to be angry or happy; apparently, it's a compliment? My nephew tried to explain that "rizz" means "charming," but then he started saying words like "skibidi" and "Ohio," and I suddenly realized how out of touch I am. Honestly, I'm trying to keep up, but every time I attempt to use these words correctly, I feel so cliche. This whole thing feels like an over-the-top "Millennials trying too hard" vibe, not the style I want.

Just minutes after the news of Taylor Swift's engagement to Travis Kelsea broke, the entire marketing industry collectively shifted focus: from Walmart to Lego to Starbucks, all brands immediately jumped on this trend.

The key is: this cultural momentum is itself an economic engine. When Katy Perry takes an 11-minute spaceflight and the internet debates for a week, this level of attention can be converted into advertising revenue, brand exposure, and cultural capital, with dozens of monetization methods; when a TikTok couple makes "pookie" a popular term, a complete ecosystem of "pookie playlists, pookie merch" emerges instantly.

Internet culture has created significant economic value through the creator economy, peripheral sales, platform traffic, and "can drive stock prices faster than financial reports." If Elon Musk's tweet can increase Dogecoin's market cap by billions of dollars, if Tesla's valuation is more determined by cultural momentum than fundamentals, then the "cultural phenomenon" is a legitimate economic force that should receive the same institutional packaging as other asset classes.

The ETF as a "wrapper" did not extract value from the community. It formalized existing value, allowing previously excluded individuals to participate. A retiree in Ohio can now access internet culture through their 401(k) retirement plan without needing to learn about cryptocurrency wallets or browse Discord communities.

However, on the flip side, this retiree may also lose a significant portion of their retirement savings on a "forgotten internet joke." With a mere 1.5% annual fee, that's $1,500 eaten up each year for a $100,000 investment. Moreover, due to regulatory requirements, an ETF can only have a maximum 25% exposure to dogecoin, meaning this retiree may not even get the "cultural exposure" they were hoping for.

The lack of financial education paired with "financial accessibility" is dangerous. Making speculative assets easier to purchase does not reduce their risk; it merely hides the risk from those who "don't know what they are buying."

However, the meme-ification of finance may strengthen communities rather than exploit them. When a cultural movement gains institutional investment, it gains stability and resources.

If internet culture can drive prices, it becomes an asset class; if social momentum can create volatility, it becomes a tradable asset. ETFs simply convert cultural energy into an institutional product vehicle.

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