Bonk’s ETP Launch: Will the SEC Support the Meme Coin Move?

The proposed BONK ETP — likely the inaugural meme coin exchange-traded product — could connect cryptocurrency investors with Wall Street.

Bonk sets its sights on Wall Street

Bonk (BONK), a leading meme coin on the Solana (SOL) blockchain, has unveiled its intentions to introduce an Exchange Traded Product in the United States.

Nom, a core developer of Bonk, shared this information during Solana’s Breakpoint event, which occurred on September 20-21. The meme coin is collaborating with Osprey Funds, a New York-based firm recognized for integrating crypto assets into traditional markets.

The objective, similar to other crypto ETPs, is to simplify access for traditional and institutional investors venturing into the crypto space. An ETP acts as a proxy for the price of the underlying asset — in this instance, BONK — and is tradable on conventional stock exchanges, bypassing the specific complexities associated with crypto wallets and exchanges.

According to the announcement, the ETP will be “seed funded by Bonk DAO and strategic partners” and will cater to both retail and institutional investors. Nevertheless, a specific launch date has yet to be confirmed.

Should this endeavor succeed, it would mark the first instance of a meme coin entering the ETP market — a significant development for a category of crypto assets often regarded as particularly speculative, ephemeral, and somewhat unserious.

Is a Bonk ETF a certainty?

Although the Bonk community has announced its intention to launch an ETP in the U.S., it’s crucial to recognize that this does not assure immediate approval for trading — or any approval at all.

This announcement is merely the initial move in what could be a prolonged and unpredictable journey, with regulatory approval from the U.S. Securities and Exchange Commission remaining a critical obstacle.

Historically, the SEC has been cautious in approving ETPs for even the leading two cryptocurrencies, voicing concerns over market manipulation, volatility, and insufficient investor protections.

For Bonk’s ETP to secure approval, the SEC will likely scrutinize several factors:

• Market transparency: The SEC will need assurance that the markets where Bonk tokens are traded are stable, clear, and resistant to manipulation. Meme coins like Bonk are generally perceived as especially volatile and speculative, which could heighten concerns.
• Investor protection: The SEC’s principal mission is to safeguard investors. They will review whether retail and institutional stakeholders have sufficient information to comprehend the risks linked to an ETP with Bonk as the foundational asset. Given meme coins’ propensity for drastic price swings, this could be a significant hurdle.
• Market impact: The SEC will also assess whether the introduction of a Bonk ETP could disturb financial markets or create unforeseen risks. It will closely examine how an ETP for a meme coin might behave differently in comparison to established assets like Bitcoin or traditional stocks.

Although Osprey Funds, which is overseeing the Bonk ETP, has experience with other crypto financial products, including Bitcoin ETFs, this does not guarantee success.

Even applications for ETPs associated with the most prominent cryptocurrencies have encountered delays and rejections from the SEC. For instance, spot Bitcoin ETFs took years to be approved, with many applications being denied before the first one launched in January 2024.

In summary, while the SEC may approve the ETP, it could also reject or postpone it if they deem the risks excessive or if the product does not align with their requirements.

Bonk’s price remains stable

The significant announcement regarding the launch of the first-ever meme coin ETP generated some excitement over the weekend, although it has not significantly impacted BONK’s spot price.

As of September 23, BONK is priced at $0.0000175, reflecting a 4.3% increase in the previous 24 hours and a more substantial 8% rise over the past week, which appears to be part of a broader rally among meme coins this week.

In comparison to its top meme coin counterparts, however, BONK has been trading sideways recently. Shiba Inu (SHIB), for instance, has experienced a more vigorous price surge, climbing over 11% in the past week to trade at $0.0000145.

Similarly, Pepe (PEPE) has outperformed BONK with gains exceeding 13% this week. Meanwhile, Dogwifhat (WIF) has emerged as the leading performer among top meme coins, boasting an 18% increase in the past week, now trading at $1.75.

Meme coin investors, known for their tendency to engage with highly speculative assets, seem to be more attracted to tokens like SHIB, PEPE, and WIF, which have displayed stronger price movements recently.

Additionally, BONK’s relatively lower profile compared to SHIB or PEPE suggests it may be overshadowed by more established meme coins.

For now, BONK’s price action remains stable. The meme coin continues to trade within a relatively narrow range, having declined from recent highs observed in July and August. It remains to be seen if this trend will persist, or if more traders will start to notice as the regulatory filing process for the ETP advances.

The announcement of Bonk’s ETP has elicited diverse reactions on social media, ranging from enthusiasm to skepticism.

For some, this initiative represents a significant breakthrough, with one user on X describing it as “insane” (in a positive context) and emphasizing how Bonk could become the first meme coin to enter the ETF realm.

However, not everyone is convinced that the industry requires meme coin-based traditional financial products for advancement. Another X user voiced concerns that such developments might actually dilute crypto’s credibility. Their viewpoint suggests that the push to legitimize meme coins for traditional financial players could be more about inflating the asset’s value for current holders than delivering real value to the wider crypto ecosystem.

The concern is that initiatives like this might divert attention from what crypto was originally designed to achieve — providing decentralized alternatives to the traditional mediated financial system — and instead foster speculative bubbles.

Others introduced a layer of cynicism, postulating that meme coins such as Bonk are merely searching for “alternative exit liquidity,” particularly as competition intensifies within the meme coin sector.

The upcoming months will determine whether this ETP genuinely delivers value or simply adds fuel to the speculative frenzy that frequently surrounds meme coins.