Rex Shares is poised to introduce a new era of unconventional crypto exchange-traded funds (ETFs) to US markets, with a Dogecoin ETF potentially leading the charge. The asset manager has adopted an innovative regulatory strategy that prioritizes rapid market entry for these digital asset products, bypassing traditional approval hurdles. This move signals a significant shift in how crypto-linked investment vehicles might access mainstream financial platforms.
An Expedited Path to Market
The key to Rex Shares' swift approach lies in its decision to register these proposed products under the Investment Company Act of 1940 and structure them as C-corporations. Unlike conventional ETFs that undergo a lengthy 19b-4 SEC approval process, this model allows Rex to sidestep standard exchange rule approvals, significantly shortening the launch timeline. Bloomberg ETF analyst Eric Balchunas highlighted this strategy, noting that a Dogecoin ETF, trading under the ticker DOJE, could debut within days, with other products linked to assets like XRP, Solana, and even TRUMP tokens likely to follow. This regulatory sidestep enables the firm to gain exposure to digital assets through a Cayman Islands subsidiary, showcasing a pragmatic approach to bringing these offerings to investors quickly.
The Tax Trade-Off: Speed Over Efficiency
While expediting market access, the C-corporation structure introduces notable tax implications for investors. Most ETFs opt to be treated as regulated investment companies (RICs), which allows them to avoid fund-level taxation by passing income and gains directly to shareholders. In stark contrast, C-corporations face taxation at the fund level, and subsequent investor payouts are also taxable – a scenario often referred to as "double taxation." Despite this significant tax drawback, Rex Shares' strategy suggests that the unparalleled speed to market and operational flexibility were deemed more critical than adhering to the tax-efficient structures typically preferred by ETFs. This strategic choice underscores the firm's determination to be a first-mover in the evolving landscape of digital asset investment products.
