The rise of meme coin ETFs, including DOGE and TRUMP, has sparked an ethical debate on their legitimacy and value. Institutional investors are weighing the prospects of trading these funds, but experts warn about the risks involved in investing in meme coins.
The Rise of Meme Coin ETFs
The latest filings with the Securities and Exchange Commission aim to bring meme coin exchange-traded funds (ETFs) to the market. These ETFs would track popular memecoins such as dogecoin (DOGE) or U.S. President Donald Trump‘s Trump coin (TRUMP). However, the launch of these funds has sparked an ethical debate on their legitimacy and value.
Utility vs. Speculation
Meme coins like DOGE and TRUMP provide no actual utility, unlike bitcoin or Ethereum’s ether (ETH), whose value comes from their real-world applications. The value of meme coins is largely driven by speculation and hype, making them a high-risk investment for institutional investors. This raises questions about the suitability of these funds for mainstream investment.
Expert Opinions
James Angel, faculty affiliate at Georgetown University’s McDonough’s Psaros Center for Financial Markets and Policy, expressed concerns about the long-term value of meme coins. “Opinions vary greatly on the value of meme coins,” he said. However, he emphasized that a sponsor of an ETF based on meme coins needs to be careful in marketing the fund as a prudent investment vehicle.
Steve McClurg, former CEO of Valkyrie and founder Canary Capital, a hedge fund that has applied for several non-meme coin crypto ETFs, shared similar sentiments. “I don’t know how you can be a fiduciary who runs an ETF knowing that the basis of your underlying [asset] is meant and designed to go to zero,” he said.
SEC Approval
The Securities and Exchange Commission has approved several spot bitcoin and Ethereum ETFs but refused to acknowledge a potential Solana (SOL) ETF. However, with more than 30 applications still pending, including three tied to memecoins, the approval of meme coin ETFs seems inevitable.
Conflicts of Interest
Nic Carter, crypto influencer and venture capitalist, expressed concerns about the conflicts of interest when presidents start or run a business, let alone launch a cryptocurrency or DeFi protocol that they set policy for. He believes that President Trump’s involvement in launching a memecoin raises questions about his ability to make impartial decisions.
The debate surrounding meme coin ETFs highlights the complexities and risks involved in investing in these funds. As institutional investors consider trading these funds, it is essential to weigh the potential benefits against the potential drawbacks.
