SEC Clarifies: Meme Coins Not Securities, Commissioner Disagrees
1min read The U.S. Securities and Exchange Commission (SEC) has clarified its stance on meme coins, stating that they do not fall under the category of securities. In a recent announcement, the Division of Corporate Finance explained that meme coins lack intrinsic value or functionality, making them more akin to collectibles than traditional securities.
SEC Commissioner Caroline Crenshaw, a Democrat, expressed disagreement with the agency's conclusion. She argued that the SEC is overstepping its jurisdiction and should not exclude meme coins from its oversight. Crenshaw further criticized the lack of a clear definition for meme coins and the absence of a compelling argument for rejecting them as securities.
The Division of Corporate Finance reasoned that meme coins are primarily driven by speculation, trends, and social media promotion, unlike traditional securities such as stocks and bonds, which are driven by part ownership in a company and income derived from dividends. The division also raised concerns about the criminal element surrounding meme coins, suggesting that other agencies should monitor these issues.
Meme coins are cryptocurrencies created as internet memes or jokes, often spread through social media as trends. They hold little to no real-world value, and owners typically buy them for entertainment or speculation. The SEC compared meme coins to collectibles, stating that they have limited or no use or functionality.
Recent examples of meme coins include $TRUMP and $MELANIA tokens, inspired by the Trump presidential campaign. These tokens aim to capitalize on the hype surrounding U.S. politics but lack intrinsic value. The explosion of meme coins, with little underlying value or use as cryptocurrencies, has led some to compare them to trading cards or other types of collectibles.
Politicians are taking steps to regulate the creation of meme coins. In California, politician Sam Liccardo aims to prevent elected officials from launching or promoting meme coins. This move comes in response to the Trump token, which experienced wild price fluctuations and could potentially be used by politicians to enrich themselves and defraud the public.
