Rex Shares is preparing to bring a new wave of unconventional exchange-traded funds (ETFs) to US markets.
He wrote:
“Looks like Rex is going to launch a Doge ETF via the 40 Act a la SSK next week.”
Balchunas pointed out that while Dogecoin may be the first to debut, other products tied to Trump, XRP, and Bonk could soon follow.
Unlike traditional ETFs that require lengthy SEC approval through the 19b-4 process, Rex Shares has chosen a different regulatory path.
The proposed products are registered under the Investment Company Act of 1940 and structured as C-corporations. This model allows the firm to sidestep the standard exchange rule approval process while gaining exposure to digital assets through a Cayman Islands subsidiary.
Meanwhile, choosing a C-corporation structure carries crucial tax implications for investors.
In contrast, C-corporations face taxation at the fund level, and any subsequent investor payouts are also taxable.
Investors have often criticized this arrangement as “double taxation.” As a result, ETFs tend to avoid this setup.
However, REX Shares’ decision suggests that speed to market and flexibility outweighed the potential tax drawbacks these products might attract.
