Wall Street has traditionally shied away from memecoins. Photo by Spencer Platt/Getty Images.
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Key Takeaways
Institutional investors typically keep memecoins at a safe distance.
A recent Franklin Templeton broke the institutional taboo against meme tokens.
However, major investors are unlikely to start buying Dogecoin or BONK anytime soon.
Since opening a dedicated digital asset arm in 2018, Franklin Templeton has been at the forefront of institutional crypto adoption. But like other Wall Street firms that have embraced crypto assets, it has mostly focused on Bitcoin, Ethereum and a handful of the most prominent altcoins. Until now.
In a recent note to investors, Franklin Templeton acknowledged a corner of the cryptosphere most institutional investors wouldn’t touch with a bargepole: memecoins. While the bulletin wasn’t quite a full-throated endorsement, it suggests attitudes toward the notoriously risky investment class are changing.
Franklin Templeton Explores Crypto’s Quirky Side
Franklin Templeton started its note with the de rigueur warning that memecoins have “no inherent value of utility.” But, after that, things got more interesting.
— Franklin Templeton Digital Assets (@FTI_DA) March 13, 2024
The research said that “memecoins have a strong relationship with their native networks”. Furthermore, the study shows how the number of active addresses interacting with meme tokens on different blockchains has changed throughout the past year.
The Relationship Between Memecoins and Network Activity
In the note, Franklin Templeton observed Solana’s network activity increased by 75% between the third and fourth quarter of 2023. At the same time, the number of Solana wallets holding memecoins also rose significantly.
The analysts tied this in to the explosive rise of Solana’s preeminent memecoin – BONK.
Source: Franklin Templeton
From having $40 million in November, BONK’s market capitalization increased to nearly $2.5 billion at its all-time high on March 5.
Franklin Templeton’s analysts said: “During Q4 of 2023, the Solana network captured a large percent of [memecoin activity] during the same time that BONK saw a price surge.”. This, they added, further demonstrated the connection between meme tokens and their native networks.
The research note did not indicate that Franklin Templeton plans to start advising its clients to invest in meme coins. On the other hand, however, within the Web 3 ecosystem, they are increasingly celebrated as an integral part of crypto culture.
Avalanche Culture Fund Invests in Meme Tokens
In January, the Avalanche Foundation reported that it had started using its Culture Catalyst program to invest in what it referred to as “community coins.”
The Foundation said the community coin category included “memecoins, NFTs, and similar tokens created by the community.”
“In particular, we note that memecoins generally have high community value because of the engagement, community spirit, and culture that they engender, which goes beyond the humor and virality that they embody.”
For institutional players, a necessary aversion to risky investments will probably always enforce a taboo against holding memecoins.
But for those who embrace crypto for its cultural, rather than just its financial value, less serious tokens provide a much-loved corollary to their blue chip cousins.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
