Meme coins are generally not considered securities and are closer to “collectible assets.” This is stated in a statement from the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC).
According to the document, participants in the “funny coins” market do not need to register with the agency. The SEC clarified that buyers and holders of such assets are not protected by securities laws.
However, fraud involving meme coins could lead to prosecution by other regulators or law enforcement agencies.
The regulator emphasized that the statement is not legally binding guidance but is intended to clarify the application of securities laws to cryptocurrencies.
The SEC added that meme tokens generally lack utility and their prices “tend to be highly volatile.” Additionally, the coins do not fit the definition of an “investment contract” under the Howey Test, as they do not involve earning income from the management or entrepreneurial efforts of third parties.
In conclusion, the SEC noted that meme coins remain outside the scope of traditional regulation. However, the agency will continue to monitor risks associated with fraud in this area.
Earlier this month, Commissioner Hester Peirce stated a similar position. She also believes that many meme coins fall outside the SEC’s jurisdiction.
Previously, analysts at Bernstein claimed that as the regulatory environment changes, liquidity in the crypto market will begin to shift from “funny coins” back to DeFi projects, NFTs, and gaming tokens.