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Popular Solana meme coin Bonk (BONK) may soon join the growing list of cryptocurrency assets tied to exchange-traded products in the United States. If successful, a BONK ETP could be the world’s first ETP, creating an extra connection between the traditional finance ecosystem and the crypto industry.
Typically, meme coins are inspired by actual events or people and created as tributes to these characters. New meme coins, like the ones chosen here by Alan Draper, are commonly used as speculative instruments. They offer investors the potential for significant returns due to their tendency to experience price spikes at a rate exceeding that of the broader crypto market. Interestingly, many meme coins are now expanding their functionalities and providing their communities with more use cases and applications in the crypto and blockchain sectors.
The Forthcoming Bonk ETP
Bonk core developer, Nom, revealed the plan for an ETP at the Solana Breakpoint event. Nom said Bonk is collaborating with New York-based crypto investments solutions provider Osprey Funds. Speaking at the event, Nom stated that Bonk aims to expose more people to Solana and its exciting features. According to him, the plan is to make Bonk available in bank accounts across the world sometime before the end of the year. Nom added the team just submitted the prospectus and is hopeful.
The efforts at a Bonk ETP will receive seed funding from Bonk DAO and multiple strategic partners. However, there is currently no confirmation about the partners or how much funding the team will receive.
A potential meme coin ETP is a noteworthy development in the crypto sector. Although Nom and the Bonk team are hopeful, the team would likely have to grapple with approval from the United States Securities and Exchange Commission (SEC).
Will the SEC Approve a BONK ETP?
The SEC has mostly been reluctant to give exchange-traded products the required greenlight. While several Bitcoin products are available today, the Commission only approved the first one in January 2024. The approval came more than a decade after the Gemini Exchange filed the first-ever application for a spot Bitcoin exchange-traded fund (ETF) in 2013. Although other applicants submitted applications, the agency denied all requests for more than ten years, citing concerns about protection against market manipulation and other illegal activity.
A spot crypto ETP grants exposure to traditional investors looking to earn from the industry without holding the asset. It is also easy to participate in the crypto sector without creating crypto exchange accounts or holding wallets. This level of exposure would significantly propel Bonk to new heights in the crypto and traditional spaces. Also, if successful, Bonk would make history as the first meme coin to receive SEC approval for an exchange-traded product.
However, there are several hurdles Bonk must cross to satisfy the SEC, an agency known for its lack of clarity regarding crypto categorizations. For instance, Bonk would be extensively scrutinized for market transparency. The team would have to prove that Bonk trading is transparent and can withstand potential market manipulation. Unfortunately, the inherent volatility in meme coins like Bonk could be a stumbling block.
Another point of scrutiny is investor protection. The SEC’s role of protecting investors in the crypto and traditional sectors requires the Commission to ensure that investors understand applicable risks. The SEC will likely require that Bonk be very clear about letting potential investors know how risky a crypto ETP can be. Consequently, the requirement for disclosure may be much higher than average because of Bonk’s price instability.
In addition to protecting the average individual investor, the Commission must also consider the likely impact of a Bonk EP on the general financial market. To determine this, the SEC would likely analyze Bonk’s tokenomics, numbers, and market dynamics to determine any potential risks the asset’s ETP could have on the market. Collaborating with Osprey Funds, a firm that has launched over 100 ETPs, is likely a deliberate move to increase its chances by adequately preparing to proactively meet the SEC’s demands.
Bonk Price Action
Bonk has had healthy price action, climbing nearly 30% in the last month and almost 50% since January. While these figures are good, other meme coins are performing better. For instance, Dogecoin (DOGE), the world’s largest cryptocurrency by market cap, has scaled 21% in the last month and nearly 35% in year-to-date (YTD) gains. Shiba Inu (SHIB) has even better numbers, at 40% in a month, and 87% YTD. In the last year, SHIB has returned more than 165% to investors.
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