On Wednesday, Canary Capital propelled Pepe into the spotlight by submitting an application for an exchange-traded fund (ETF) that mirrors the meme coin’s valuation. However, its subdued market response highlights Wall Street’s lukewarm interest in assets driven more by sentiment than substance.
As of Thursday, Pepe was trading at approximately $0.00000359, marking a 0.6% increase over the previous day, according to CoinGecko data. The preceding day witnessed a 10% spike in trading volume, reaching $432 million.
Previously, meme coins like Pepe and Dogecoin were pivotal for firms such as Wintermute. However, last year, the crypto market maker acknowledged that its forecast of a major asset manager launching a meme coin ETF was intended humorously.
Currently, four U.S.-listed Dogecoin ETFs are offered by crypto asset managers. Yet, James Butterfill, CoinShares’ head of research, told Decrypt that institutional investors find it challenging to justify investing in assets like Doge, which primarily attract retail investors.
Dogecoin is ranked 17th among all crypto ETFs tracked by CoinShares, amassing $13 million in year-to-date inflows. Butterfill noted that outside ETFs for Bitcoin, Ethereum, Solana, and XRP, other altcoin-linked ETFs account for only 9% of total assets under management.
“They’re just not popular with investors,” he remarked. “It’s the big four and not much else.”
Decrypt has sought comments from Canary on this development.
Last November, SEC Chair Paul Atkins suggested that most cryptocurrencies, including meme coins, should not be classified as securities—a stance reinforced by recent SEC guidance identifying them as “digital collectibles.”
Under last year’s general listing standards for crypto ETFs, exchanges can list commodity-based ETFs without individual approvals. A prerequisite is a six-month history of regulated futures trading for the digital assets they represent.
Currently, Pepe futures are traded on Kraken, and Canary’s filing emphasized that these contracts occur on regulated or registered venues.
Canary has also filed applications for ETFs tracking other meme coins like Mog, Pudgy Penguins’ PENGU, and TRUMP, associated with former President Donald Trump. Last year, Bloomberg Senior ETF Analyst Eric Balchunas expressed doubts about the approval of the Trump-related ETF by the SEC due to insufficient futures trading.
Balchunas once commented to Decrypt that the ETF industry is known for its “spaghetti at the wall” strategy, while Butterfill described Thursday’s flurry of filings from some issuers as a “machine gun approach.”
Tuttle Capital Management has gone further by appealing to degens with applications in January for leveraged TRUMP, BONK, and MELANIA ETFs. The SEC’s final decision on these applications remains pending.