On Thursday, the U.S. Securities and Exchange Commission (SEC) clarified that meme coins are not subject to federal securities laws, stating that these types of cryptocurrencies do not qualify as securities under the Securities Act of 1933. The SEC’s Division of Corporation Finance released a statement emphasizing that transactions involving meme coins do not involve the offer and sale of securities, and as such, holders and participants in these coins are not required to register their transactions with the SEC.
Meme coins, often created as digital collectibles and driven largely by market demand and speculative trading, are viewed by the SEC as being bought primarily for social interaction and entertainment, rather than for investment purposes. The SEC’s stance aligns with the view that meme coins are not traditional financial instruments covered by securities regulations.
However, the SEC did add an important caveat. While meme coins themselves are not considered securities, fraudulent activities related to their creation, offer, or sale could still fall under the jurisdiction of other federal or state laws, with potential enforcement actions from regulatory authorities.
In parallel with the SEC’s statement, U.S. House Democrats are planning to introduce the Modern Emoluments and Malfeasance Enforcement (MEME) Act, aimed at prohibiting political figures and their families from launching meme coins. Representative Sam Liccardo from California is spearheading this legislation, which would apply to all political offices, including the presidency. The bill is designed to prevent politicians from using meme coins for personal gain, following the controversial launch of the TRUMP meme coin, which occurred just before President Donald Trump’s inauguration. The TRUMP coin, which saw significant initial success, has since experienced a sharp decline, dropping more than 50% in value over the past month.
Despite the criticisms surrounding meme coin launches by political figures, some, like Crypto Czar David Sacks, have defended the TRUMP meme coin, viewing it more as a collectible item than a financial asset.
The SEC’s statement and the proposed MEME bill highlight the growing concerns over the intersection of politics, digital currencies, and financial regulation, and signal an increasing effort to establish clearer rules in the evolving world of cryptocurrencies.
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