SEC Says Meme Coins Are Not Securities

The SEC posted new guidelines today, claiming that meme coins are no longer bound by securities regulations. The Commission will be stopping enforcement, but other agencies may pick up the slack.

This could be a huge market opportunity, or it might embolden the rampant scammers. Latest meme coin crimes have dominated the news cycle, stealing millions and tarnishing crypto’s reputation.

SEC Will Not Take Enforcement Actions Against Meme Coins

The SEC, one of the US’ top financial regulators, has been trying to reassess its crypto responsibilities. When Hester “Crypto Mom” Peirce, one of its Commissioners, announced the new Crypto Task Force, she claimed that the Commission may try to delegate enforcement to other agencies like the CFTC.

Today, the SEC released a statement detailing its new policy on meme coins.

“Meme coins typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation. In this regard, they are akin to collectibles. Meme coins also typically have limited or no use or functionality… [and] do not involve the offer and sale of securities under the federal securities laws,” it said.

Peirce already commented that the SEC may not wish to regulate meme coins in the future. The Commission has been winding down its crypto enforcement arm and resolving extant legal battles left and right.

In this light, a cool-off period for meme coin enforcement seems very understandable.

However, the SEC isn’t planning to turn the meme coin space into a complete free-for-all. As the letter noted, “fraudulent conduct related to the offer and sale of meme coins may be subject to enforcement action or prosecution by other federal or state agencies under other federal and state laws.”

In other words, scammers have been warned not to play around.

“In English — just because we’re not going to go after you doesn’t mean other regulators won’t,” wrote Eleanor Terrett.

This seems like an unequivocally pro-crypto development, but it might have a downside. Rampant scams have been ascendant in the meme coin space, and the SEC has an important role in protecting consumers.

Between high-profile rug pulls like LIBRA or the North Korean Lazarus Group using meme coins to launder stolen Bybit funds, some crime prevention might be needed.

Ultimately, it’s difficult to predict how the SEC’s new guidance will impact the meme coin space. On one hand, looser restrictions will encourage more products and their usage.

On the other hand, this move will probably allow more influential figures or celebrities to launch their own meme coins and drive pump-and-dumps. Regardless, we’re entering a rather chaotic new moment for the meme coin space.