On 27 February 2025, the US Securities and Exchange Commission (SEC) declared that memecoins—digital assets inspired by internet memes, trends, or cultural phenomena—do not qualify as securities under federal law.
According to the SEC statement, memecoins are classified as “collectibles” rather than securities.
“A memecoin does not constitute any of the common financial instruments specifically enumerated in the definition of “security” because, among other things, it does not generate a yield or convey rights to future income, profits, or assets of a business,” said SEC.
“Memecoins typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation,” explained SEC.
WOW.
The SEC just said that meme coins are generally NOT considered securities under US federal law.
They also said that meme coins have “limited or no use” and do not need to be registered with the SEC.
This is a MASSIVE statement by the SEC. pic.twitter.com/7KpB2c2481
— The Kobeissi Letter (@KobeissiLetter) February 27, 2025
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Exemption From Federal Securities Law
The SEC stressed that fraudulent schemes involving meme coins could still face enforcement actions. This includes cases where assets labeled as “memecoins” are used to evade securities laws or mislead investors.
According to the SEC, meme coins generally lack utility or functionality. They are primarily driven by market demand and speculation. Unlike securities, they do not grant holders rights to future profits or ownership in a business.
However, the SEC clarified that the investors and buyers of these tokens will not be protected. They will not receive protections typically afforded under federal securities laws.
Hence, the transactions involving meme coins are not subject to registration under the Securities Act of 1933. Hence, creators and traders of meme coins are not required to comply with stringent financial regulations applicable to traditional securities.
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Should Presidential Memecoins Be Against Law?
Parallelly, California Democrat Rep Sam Liccardo has introduced a draft legislation called MEME ACT or the Modern Emoluments and Malfeasance Enforcement Act.
He questioned the legitimacy of Presidential memecoins, taking a jab at US President’s $TRUMP coin and the first lady’s $MELANIA coin.
“That behaviour is so self-evidently unethical that it raises the question why isn’t there a clear enough prohibition,” he said. He added that Trump’s meme coin raises concerns about transparency, insider trading and improper foreign influence.
Interestingly, Licardo’s legislation would block the president, members of Congress, and other senior officials, as well as their spouses and children, from issuing or sponsoring securities, commodities and cryptocurrencies like meme coins.
Today, I introduced the MEME Act, which prohibits top federal officials from issuing, sponsoring, or promoting a security, commodity, or digital asset with criminal and civil penalties. pic.twitter.com/NbjmcwoEB5
— Rep. Sam Liccardo (@RepLiccardo) February 27, 2025
Key Takeaways
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The announcement triggered a surge in meme coin prices. Popular tokens like Dogecoin (DOGE) and Shiba Inu (SHIB) experienced double-digit gains within hours of the news, with trading volumes spiking significantly.
The SEC’s declaration that meme coins are not securities represents a pivotal moment for cryptocurrency regulation in the US.
The post SEC Says Memecoins Are Not Subject To Oversight, But Fraudulent Schemes Will Face Action appeared first on 99Bitcoins.
