Meme coin Bonk plans to launch an ETP — but is the SEC on board?

The proposed BONK ETP (possibly the first meme coin exchange-traded product) could create a bridge between crypto investors and Wall Street.

Bonk sets his sights on Wall Street

Bonk (BONK), one of the most popular cryptocurrencies built on Solana (SOL), has announced plans to launch an Exchange Traded Product in the US.

Nom, one of Bonk’s core developers, announced the news at Solana’s Breakpoint event, which took place on September 20-21. The meme coin is partnering with Osprey Funds, a New York-based firm known for bringing crypto assets to traditional markets.

As with any crypto ETP, this move aims to lower barriers for traditional and institutional investors to access crypto. An ETP acts as a representation of the price of the underlying asset — in this case, the asset would be BONK — and can be traded on traditional exchanges, thus removing certain complexities of crypto wallets and exchanges.

According to the announcement, the ETP will be “seed-funded by Bonk DAO and strategic partners” and will be available to both retail and institutional investors. However, no official launch date has been confirmed yet.

If successful, this would be the first time a meme coin has entered the ETP space — a critical shift for a category of crypto assets that is often viewed as particularly speculative, short-lived, and downright frivolous.

Is the Bonk ETF a done deal?

While the Bonk community has announced plans to launch an ETP in the US, it is important to understand that this does not mean the product will be approved for trading anytime soon or ever.

This announcement is just the first step in a long and uncertain journey, and gaining regulatory approval from the U.S. Securities and Exchange Commission remains a significant hurdle.

The SEC has been cautious in the past about approving ETPs for even the two largest cryptocurrencies, citing concerns about market manipulation, volatility and a lack of investor protection.

In order for Bonk’s ETP to be approved, the SEC will likely need to evaluate several things:

Market transparency: The SEC will want to ensure that the markets where Bonk tokens trade are stable, transparent, and resistant to manipulation. Meme coins like Bonk are often considered particularly volatile and speculative, which can raise concerns.
Investor protection: The SEC’s primary mission is to protect investors. It will be looking at whether retail and institutional investors are knowledgeable enough to understand the risks of investing in an ETP that uses Bonk as the underlying asset. This could be a sticking point, as the price of meme coins can fluctuate wildly.
Market impact: The SEC will also consider whether introducing a Bonk ETP could disrupt financial markets or create unforeseen risks. It will closely evaluate how an ETP for a meme coin might behave differently than one for more established assets like Bitcoin or traditional stocks.

While Osprey Funds, which manages the Bonk ETP, has experience with other crypto financial products, including Bitcoin ETFs, this still does not guarantee success.

Even ETP applications for the most well-known cryptocurrencies have faced delays and rejections from the SEC. For example, spot Bitcoin ETFs took years to be approved, with multiple applications rejected before the first application was launched in January 2024.

In short, the SEC may approve the ETP but reject or delay it if it deems the risks are too high or the product does not meet its standards.

Bonk’s price action remains sideways

The big announcement regarding the launch of the first meme coin ETP created some excitement over the weekend, but it did not significantly impact BONK’s spot price.

BONK is trading at $0.0000175 as of September 23. It has gained 4.3% in the last 24 hours and a more significant 8% in the last seven days. This increase appears to be part of the meme coin rally over the past week.

However, compared to the top meme coins, BONK has been trading sideways lately. Shiba Inu (SHIB), for example, has seen a more robust price rally, trading at $0.0000145, up more than 11% in the past seven days.

Similarly, Pepe (PEPE) has outperformed BONK with a gain of more than 13% on the week. Meanwhile, Dogwifhat (WIF) has been the biggest gainer among the top meme coins, currently trading at $1.75 after gaining 18% in the past week.

Meme coin investors, known for investing in highly speculative assets, appear to be focusing more on tokens such as SHIB, PEPE, and WIF, which have been showing stronger price movements in recent days.

Additionally, BONK’s relatively low profile compared to coins like SHIB or PEPE could mean that it has been overshadowed by more established meme coins.

For now, BONK price action remains subdued. The meme coin’s price is still trading in a relatively narrow range, down from recent peaks in July and August. It remains to be seen whether this trend will continue or whether more investors will pay attention as the regulatory filing process for the ETP unfolds.

BONK/USDT 1-hour chart, August 15 – September 23 | Source: crypto.news

Bonk’s announcement that he would launch an ETP sparked mixed reactions on social media, ranging from excitement to skepticism.

For some, the move is a milestone, with one X user calling it “crazy” (in a good way) and noting that Bonk could be the first meme coin to enter the ETF space.

However, not everyone agrees that the industry needs traditional financial products based on meme coins to move forward. Another X user expressed concern that this could actually undermine the legitimacy of cryptocurrencies. From their perspective, the effort to legitimize meme coins for traditional financial players could be about inflating the value of the asset for existing holders, rather than providing real value to the broader crypto industry.

This feels like the exact opposite of legitimating crypto. It’s an inevitable path because those who use it as an investment will try anything to legitimise it in order to gain more buyers and thus increase their net worth.

I think cryptocurrencies in general could suffer from this.

— Enryu (@0xEnryu) September 21, 2024

The worry is that such moves could undermine what cryptocurrencies were initially intended to do, at least in part: offer decentralized alternatives to traditional, intermediary finance, and instead lead to speculative bubbles.

Others added a dose of skepticism, suggesting that meme coins like Bonk are simply trying to find “alternative exit liquidity,” especially as competition in the meme coin space heats up.

Now that Tron has taken over Solana’s main meme #carpetfactory In the use case, memes need to find alternative exit liquidity.

— Ajki (@ajki76) September 21, 2024

The coming months will reveal whether this ETP adds real value or simply adds fuel to the fire of speculation surrounding meme coins.