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

The proposed BONK ETP could mark a groundbreaking step as potentially the first-ever meme coin exchange-traded product, creating a bridge between cryptocurrency investors and Wall Street.

Bonk Aims for Wall Street

Bonk, a leading meme coin built on the Solana blockchain, recently announced its plans to launch an Exchange Traded Product (ETP) in the United States. This announcement was made by Nom, a core developer for Bonk, during the Solana Breakpoint event held on September 20-21. The project is collaborating with Osprey Funds, a New York-based firm known for integrating crypto assets into traditional financial markets.

The primary goal of the ETP is to simplify access to cryptocurrencies for traditional and institutional investors. By representing the underlying asset’s price—BONK in this case—an ETP can be traded on conventional stock exchanges, thus bypassing the complexities associated with crypto wallets and exchanges.

According to the announcement, the ETP will be “seed funded by Bonk DAO and strategic partners,” making it available to both retail and institutional investors. However, an official launch date for the product has yet to be confirmed.

If successful, the proposed Bonk ETP could mark a groundbreaking moment as the first meme coin to enter the exchange-traded product space. This would represent a significant shift for an asset class often perceived as speculative, short-lived, and lacking seriousness.

Is a Bonk ETP Guaranteed?

While the Bonk community has announced plans for an ETP in the U.S., it’s crucial to recognize that this doesn’t guarantee immediate approval for trading. This announcement is merely the initial step in what could be a lengthy and uncertain process, with regulatory approval from the U.S. Securities and Exchange Commission (SEC) being a major hurdle.

Historically, the SEC has been cautious about approving ETPs for even leading cryptocurrencies due to concerns about market manipulation, volatility, and insufficient investor protections.

For Bonk’s ETP to gain approval, the SEC would need to assess several factors:

• Market Transparency: The SEC will want assurance that the markets trading Bonk tokens are stable, transparent, and resistant to manipulation. Given the speculative nature of meme coins like Bonk, this could raise red flags.
• Investor Protection: The SEC’s primary responsibility is safeguarding investors. It will scrutinize whether both retail and institutional investors are adequately informed about the risks associated with an ETP linked to a volatile asset like Bonk.
• Market Impact: The SEC will also evaluate the potential effects of a Bonk ETP on financial markets, considering whether it could introduce unforeseen risks or disruptions. They will analyze how a meme coin ETP might behave differently compared to more established assets like Bitcoin or traditional stocks.

Although Osprey Funds has experience with various crypto financial products, including Bitcoin ETFs, this doesn’t guarantee success for Bonk. Even applications for well-known cryptocurrencies have faced delays and rejections from the SEC. For instance, spot Bitcoin ETFs took years to be approved, with many applications denied before the first one launched in January 2024.

In essence, while there is a chance the SEC could approve the ETP, it could also reject or delay the application if it deems the risks too high or the product not up to its standards.

Bonk’s Price Movement Remains Steady

The announcement of the first-ever meme coin ETP generated some excitement over the weekend, but it hasn’t significantly impacted BONK’s spot price. As of September 23, BONK was trading at $0.0000175, showing a modest 4.3% increase in the past 24 hours and an 8% rise over the last week, aligning with a broader rally in meme coins.

However, BONK has been relatively stagnant compared to its meme coin counterparts. For instance, Shiba Inu has experienced a robust price surge, climbing over 11% in the past week to reach $0.0000145, while Pepe has outperformed BONK with gains exceeding 13%. Dogwifhat has emerged as the top gainer among leading meme coins, boasting an 18% increase over the week to trade at $1.75.

Meme coin investors, known for their interest in highly speculative assets, seem to be gravitating toward tokens like SHIB, PEPE, and WIF, which have demonstrated stronger price movements recently.

BONK’s lower visibility compared to more established meme coins like SHIB or PEPE may contribute to its relative underperformance. Currently, BONK’s price is fluctuating within a narrow range, having declined from recent highs in July and August. It remains uncertain whether this trend will persist or if increased attention will follow as the regulatory process for the ETP unfolds.

Social media’s mixed reactions

The news of Bonk’s upcoming ETP has generated a mix of excitement and skepticism on social media. Many users see this as a groundbreaking development, with one X user describing it as “insane” in a positive light and emphasizing Bonk’s potential to be the first meme coin to enter the ETF market.

Not everyone shares the enthusiasm for meme coin-based financial products. One X user voiced concerns that such developments could actually undermine the legitimacy of the cryptocurrency industry. They argued that the drive to legitimize meme coins for traditional financial institutions might prioritize inflating the asset’s value for current holders rather than delivering real value to the broader crypto community.

There are concerns that initiatives like this could divert attention from the original goals of cryptocurrency, which aimed to provide decentralized alternatives to traditional financial systems. Critics fear that such developments may instead foster speculative bubbles.

Adding to the skepticism, some users suggested that meme coins like Bonk are merely seeking “alternative exit liquidity,” particularly as competition intensifies in the meme coin market. This perspective raises questions about the long-term value and intent behind such financial products.

The coming months will reveal whether this ETP brings actual value or simply adds fuel to the speculative fire that often surrounds meme coins.