Dogecoin rallied 30% this week after Tesla and Twitter CEO Elon Musk changed his social media platform’s logo to the coin’s famous shiba inu dog, however, the crypto’s popularity has still not earned it an exchange-traded product (ETP).
The entrepreneur and media personality opted to replace Twitter’s longstanding blue bird logo after a $258m law suit was filed accusing him of manipulating dogecoin’s price, which soared 36,000% between lows and all-time-highs.
Dogecoin was founded by software engineers Billy Markus and Jackson Palmer in 2013 as a joke about the speculative nature of cryptocurrencies.
Musk has since tweeted about the crypto on several occasions including a recent post about the change to Twitter’s branding to his 134m followers
While tongue-in-cheek, Musk has had a repeated and material impact on the coin’s price.In December 2021, he announced Tesla would accept dogecoin as payment for some merchandise, sending its price up 20%. A month later when this capability went live, its price increased by an additional 15%.
The coin is now the eighth-largest crypto with a market cap of $13bn, according to CoinMarketCap, so it might make sense for an ETP to offer exposure given smaller altcoins have already made their way into the wrapper.
Laurent Kssis, crypto specialist at CEC Capital, noted while such an ETP may gather assets, dogecoin lacks a professional investment asset given its satirical roots.
“It was started as a meme coin and then it was a gift to give back to the crypto industry. Then Elon got involved from 2020 and we saw a ‘pump and dump’ scenario play out.
“Although it has a top 10 market cap within crypto, it just does not sit as an investable asset within the ETP community,” Kssis said. “It may have more invested in it in ETP format than some of the existing exposures that are available but it would be purely opportunistic.”
Echoing his thoughts, Townsend Lansing, head of product at CoinShares, said his firm decided against a product launch given dogecoin’s founder said the asset had “zero utility and is a joke”, which raises questions around the coin’s longevity.
“Regulators such as the Jersey Financial Services Commission (JFSC) request us to include prohibited coin definitions in our prospectus. This explicitly excludes meme coins, a definition that covers dogecoin,” he added.
CoinShares’ prospectus defines meme coins as being associated with “comical or animated memes” or those “having no intrinsic utility or functionality”.
Lansing added: “Some exchanges such as Deutsche Boerse and Euronext will not allow dogecoin ETPs to list so there are reasons why we would not launch this product.”
