SEC Commissioner Disses Memecoins, Calls for Regulation

The U.S. Securities and Exchange Commission (SEC) has faced criticism from one of its own commissioners over its stance on memecoins. Commissioner Caroline Crenshaw issued a dissenting opinion on Feb. 27, arguing that memecoins could be considered securities under the Howey test due to the coordination between developer teams and promoters.

In a statement released on the same day, the SEC defined memecoins as online social trends with speculative value and high volatility, and stated that they are not securities. However, Commissioner Crenshaw disagreed with this assessment, stating that "Today's statement paints meme coins as cultural projects whose purpose is entertainment and social engagement. The reality is that meme coins, like any financial product, are issued to make money."

Memecoins have gained significant attention in recent months due to several high-profile scams, hacks, and even presidential memecoin launches. The collapse of the TRUMP token shortly after its launch is just one example of the volatility and risks associated with these digital assets.

U.S. regulators and lawmakers have been attempting to rein in memecoins, with several Democrat lawmakers calling for investigations into potential ethics violations. On Feb. 27, California Member of Congress Sam Liccardo announced that House Democrats are preparing a bill that would ban presidential memecoins. The proposed bill, titled "The Modern Emoluments and Malfeasance Enforcement (MEME) Act," would prohibit U.S. lawmakers from sponsoring, issuing, or endorsing any digital asset.

Attorney Elizabeth Davis, a former chief attorney at the Commodity Futures Trading Commission (CFTC), has argued that memecoins should be regulated by the CFTC. Davis expressed confidence that comprehensive memecoin regulations would be established in the United States over the next year, putting an end to the regulatory ambiguity surrounding social tokens.