SuperEx丨U.S. Asset Management Firms Apply for Meme Coin ETFs

[SuperExMedia]

#Memecoin #ETF #SEC

On January 21, 2025, at 10:40 PM, Bloomberg’s senior ETF analyst Eric Balchunas reported that Rex has submitted new ETF registration documents to the U.S. Securities and Exchange Commission (SEC). The application, filed jointly by Osprey Funds and Rex Shares, includes multiple altcoin/meme coin funds, such as TRUMP ETF, DOGE ETF, BONK ETF, as well as funds for Ethereum, XRP, and Solana. This move challenges the SEC’s traditional regulatory stance on meme coins and the broader cryptocurrency market.

According to Eric Balchunas, the filing indicates that each proposed fund will target specified reference assets, with plans to invest at least 80% of its net assets in those assets. The launch of these funds clearly reflects the growing market activity and potential investment value of meme coins and other altcoins.

Just a few days ago, SuperEx published an article titled “The Dream Start and Subsequent Trend of Memecoin in 2025.” As it turns out, the beginning of 2025 for meme coins has been even more spectacular than expected. This is not only a positive development for meme coins but also signifies a crucial step in the acceptance and legitimization of crypto assets in mainstream financial markets.

Positive Impact of Meme ETF on the Market

1) Attracting Capital Flow and Boosting Market Liquidity

Meme coins, known for their extreme volatility and entertainment value, have increasingly attracted the attention of investors as mainstream cryptocurrencies like Bitcoin and Ethereum stabilize. Many investors are now turning their focus to altcoins and meme coins, which carry higher risks but also significant profit potential. The application for Meme ETFs, proposed by Rex and Osprey Funds, aims to incorporate these assets into an ETF framework, providing an accessible and specialized investment channel.

This move will allow traditional and institutional investors to more easily enter the meme coin market, ultimately increasing market liquidity. For example, meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) already have large communities and active market trading. Once included in ETFs, investors will no longer need to buy and manage cryptocurrencies directly but can easily participate in the market through ETFs. This will significantly boost meme coin liquidity and attract more capital back into the cryptocurrency market.

2) Expanding Market Acceptance and Bringing in Institutional Investment

The cryptocurrency market is currently dominated by retail investors, particularly those with a high-risk appetite. However, ETFs, as traditional financial products, hold significant influence among institutional investors. If the Meme coin ETFs are approved, they could offer a more compliant and transparent investment channel for institutions. This would represent a major boost in market recognition for meme coins. Institutional participation typically enhances market maturity, stability, and depth.

Furthermore, the diversified fund composition of meme coin ETFs could mitigate the volatility risk of individual assets, thus attracting institutional funds that were previously disinterested in investing in a single meme coin. This development will accelerate meme coins’ transition into the mainstream investment market and elevate their position in investment portfolios.

3) Promoting Regulatory Transparency in the Crypto Market

Meme coins are one of the most controversial asset classes in the crypto market, often criticized for their lack of clear value foundations and speculative nature, which has led to regulatory scrutiny. If the meme coin ETF is approved, it could prompt regulatory bodies to rethink and adjust their policies concerning meme coins and the crypto market at large. ETFs, being a compliant investment tool, require higher transparency and information disclosure about the underlying assets, which may drive the market toward greater standardization.

If this application is approved, the SEC could initiate a further standardization review of the meme coin market, establishing clearer regulatory frameworks to ensure investor protection. This will positively impact the healthy development of the market, particularly by providing more secure investment paths for those hesitant to enter the meme coin market.

Can the Meme ETF Application Be Approved?

1) SEC’s Position and Challenges

The U.S. Securities and Exchange Commission (SEC) has historically taken a cautious stance towards cryptocurrencies and meme coins, particularly due to their speculative nature. The SEC often argues that meme coins lack support from the real economy and can easily lead to investor harm. As such, when considering ETF applications related to meme coins, the SEC may subject them to stringent scrutiny, focusing on potential market risks and investor protection measures.

However, as the market continues to mature and meme coins gain more social and cultural penetration, the SEC might gradually ease its regulatory restrictions on these assets. In the past, the SEC has approved ETF applications linked to Bitcoin and Ethereum, signaling a shift in its approach to crypto assets. Therefore, although meme coin ETFs face rigorous regulatory examination, the increasing demand for these assets may prompt the SEC to make compliance adjustments, potentially opening the door for the approval of such funds.

2) Market Risks and Regulatory Gaps

Despite the positive reception of meme coin ETFs in the market, significant risks remain. Meme coins are known for their extreme price volatility, and many of them lack mature technology or real-world use cases, relying instead on community enthusiasm and social media hype. During the SEC’s review process, assessing the market value and long-term potential of meme coins will be a key challenge.

Moreover, regulators may be concerned about investor protection in relation to these “entertainment” assets. Questions surrounding how to prevent excessive market speculation, ensure that investors fully understand the risks associated with meme coins, and avoid bubbles forming around certain meme coins, will all be critical factors in determining whether the SEC approves the ETF.

3) Changes in SEC’s Regulatory Approach After Trump’s Presidency

Under President Trump, there has been a notable shift in the SEC’s regulatory stance, particularly regarding cryptocurrencies. Trump appointed Mark Uyeda, a Republican member, as the SEC’s acting chair, who is considered to be more supportive of crypto. Uyeda’s appointment led to the creation of a cryptocurrency enforcement task force within the SEC, aimed at building a new regulatory framework for digital assets. These changes may make the SEC more lenient in approving crypto-related products, including meme coin ETFs.

However, even with these changes, the SEC will still need to weigh factors such as market stability and investor protection. The approval of the meme coin ETF will ultimately depend on how the SEC balances these considerations during its review process.

The Far-reaching Impact of Meme ETF on the Market

1) Solidifying the Market Position of Meme Coins

If the Meme ETF is approved, it will undoubtedly provide a significant endorsement of meme coins within the cryptocurrency market. This would mark a pivotal transition for these assets, which were once regarded as purely cultural phenomena, into a more formal and regulated component of traditional financial markets. For investors, this means meme coins will shift from being seen as speculative or “fringe” assets into a legitimate, investable asset class. Such approval would validate meme coins as an asset type worthy of mainstream financial attention, contributing to a more structured market for these once unconventional assets.

2) Accelerating the Decentralization and Mainstreaming of the Crypto Market

The approval of the Meme ETF could accelerate the decentralization and mainstream adoption of the cryptocurrency market. By bringing meme coins into the ETF framework, traditional investors and financial institutions will gain greater exposure to and understanding of the crypto space. This increased exposure could foster deeper integration between crypto assets and traditional financial markets, potentially encouraging the development of more financial products (such as ETFs, index funds, etc.) focused on crypto assets. As a result, the crypto market would move closer to mainstream acceptance, benefitting from the expanded infrastructure and enhanced credibility provided by traditional finance.

3) Driving Innovation and Integration of Other Crypto Assets

The approval of the Meme coin ETF would not only represent a victory for meme coins but also open new opportunities for other crypto assets. As market recognition of meme coin ETFs grows, other blockchain-related innovations and fund products are likely to attract more attention and investment. Particularly, high-potential, early-stage projects that are still developing could benefit from increased capital support and market opportunities. The approval could therefore spur broader innovation within the crypto sector, encouraging the growth and maturity of emerging crypto assets and technologies.

Conclusion

The application for the Meme ETF by Rex and Osprey Funds, if successful, could bring unprecedented changes to the crypto market. It has the potential to enhance liquidity in the meme coin market, increase institutional investor participation, and push crypto assets toward greater compliance and transparency. However, the final approval rests largely on the SEC’s regulatory stance. Should the ETF be approved, the market position of meme coins will be further solidified, and it could even lead the charge for the mainstream adoption of crypto assets.