Canary Capital has officially filed an application for an exchange-traded fund (ETF) that aims to track the price of the meme coin Pepe. However, the market reaction to this development has been relatively subdued. On Thursday, Pepe was trading at approximately $0.00000359, reflecting a modest increase of about 0.6% over the previous day, according to data from CoinGecko. Despite a 10% rise in trading volume the day before, which amounted to $432 million, the overall excitement seems limited.
The muted response to Pepe’s ETF application marks a continued hesitance within Wall Street toward assets heavily influenced by market sentiment, often described as trading on “vibes.” This is evident when looking at the current landscape of cryptocurrency ETFs. Notably, Dogecoin stands as the 17th ranked option among all crypto ETFs monitored by CoinShares, having garnered $13 million in year-to-date inflows.
James Butterfill, the head of research at CoinShares, noted that crypto ETFs outside of the dominant figures like Bitcoin, Ethereum, XRP, and Solana lack popularity among investors. He remarked, “They’re just not popular with investors. It’s the big four and not much else.” Butterfill’s insights underline the existing challenges for institutional investors who seek to construct a legitimate investment narrative around meme coins like Dogecoin, which tends to cater more to retail audiences. For context, ETFs related to altcoins, aside from Bitcoin and its close competitors, account for just 9% of the total assets under management in the ETF space.
In November, SEC Chair Paul Atkins suggested that many cryptocurrencies, including meme coins, shouldn’t be classified as securities. This notion was further reinforced by recent SEC guidance that designated meme coins as a form of “digital collectibles.” Last year, the SEC established generic listing standards for crypto ETFs, permitting exchanges to list commodity-based ETFs without individual approval as long as the digital assets in question have a six-month track record of regulated futures trading.
Currently, futures for Pepe are being traded on the Kraken exchange, and Canary’s filing highlighted that contracts for Pepe are generally available on regulated trading platforms. Aside from its attempt with Pepe, Canary Capital has also made attempts to launch ETFs tracking other meme coins, including Mog and Pudgy Penguins’ PENGU, as well as Donald Trump-themed coins like TRUMP.
Eric Balchunas, a senior ETF analyst at Bloomberg, has expressed skepticism about the likelihood of Trump-related ETFs passing SEC scrutiny, citing insufficient futures trading as a significant hurdle. He previously noted that the ETF industry often resembles an experimental phase, with multiple issuers employing what he described as a “machine gun approach” to filing proposals.
Tuttle Capital Management has also taken proactive steps in targeting niche audiences, having submitted ETF applications for more leveraged investments such as TRUMP, BONK, and MELANIA. However, the SEC has yet to provide a definitive ruling on these applications. The landscape remains dynamic, yet it is clear that the appetite for meme coin ETFs continues to wane among traditional investors.
