Dogecoin is in the headlines thanks to Elon Musk’s highly anticipated “Saturday Night Live” hosting gig over the weekend, which was followed by the cryptocurrency losing a third of its price. Launched in 2013, Dogecoin is a crypto based on an internet meme of a Japanese dog and started as a parody of Bitcoin. Like its cryptocurrency peers, Dogecoin can be used as a form of payment, although its prevailing use case has been as a tradeable asset on platforms like Robinhood and eToro.

Dogecoin’s boom is marred with confusion among financial analysts, while many retail investors just find it funny. The recent surge in retail cryptocurrency adoption combined with celebrity backing, most prominently from Musk, has sparked record demand for the joke crypto. But despite its rising adoption, financial analysts struggle to make heads or tails of the whole affair, as Dogecoin has very limited uses, even by cryptocurrency standards. The crypto lacks market infrastructure with no institutional Dogecoin custodians or brokers, and it sees no meaningful developer activity, per a Galaxy Digital Research report. By contrast, more than 300 new developers per month join Ethereum projects. Thus, Dogecoin’s popularity likely owes to holders' love of memes and nihilistic enjoyment of perplexing the markets. In fact, more than 44% of crypto holders in the US and UK say they own cryptocurrencies just for fun, the second-most cited reason after using them as growth investments.

Dogecoin’s popularity presents strong user acquisition opportunities for trading apps, but they’ll need adequate consumer protections in place or risk regulators’ ire.

• Stock-focused trading apps and crypto exchanges alike aim to tap into the surging demand. At the time of writing, Dogecoin was the fourth-largest cryptocurrency by market cap at $67.40 billion. While Robinhood and eToro have a head start in offering the meme asset, Gemini added it last week, and Revolut is rumored to be planning a launch soon.
• Dogecoin support may enhance their value proposition, but fintechs should be wary of exposing inexperienced investors to such a risky asset. Trading apps like Robinhood are already in regulators’ crosshairs over the GameStop debacle in January, with SEC chairman Gary Gensler sharing plans last week to better protect consumers from gamified interfaces and the dangers of wrongdoers using social media to hype stocks. Now fintechs that offer or plan to add Dogecoin trading will face additional oversight, with Gensler adding a few days later that more investor protections are needed in the cryptocurrency market. Fintech apps that offer Dogecoin trading should therefore ensure they add appropriate customer support and financial education on the inherent risks—such as high price volatility—of investing in Dogecoin to meet growing regulatory scrutiny.