SEC Rules Meme Coins Are Not Securities Under Federal Law

• The SEC confirmed that meme coins aren’t securities and don’t require registration.
• Commissioner Pierce stated that investors are responsible for the tokens they buy or sell. 
• The announcement also stated that fraudulent activities will be subjected to prosecution. 

The Division of Corporate Finance, a unit of the U.S. Securities and Exchange Commission (SEC) announced that the offer and sale of meme coins does not qualify as securities under the Federal Securities Laws. Further, it stated that the traders need not register their transactions with the Commission, adding that with the exemption, purchases of the token or its holders will not be protected by Federal Law. However, as per the announcement, any fraudulent activities will still be subjected to enforcement actions or prosecution by other Federal or State agencies. Despite this exemption, the SEC Commissioner, Hester Peirce said, 

Investors are responsible for doing their own due diligence on the tokens they buy and trade and look for the government to tell them what to do and what not to do, nor to bail them out when they do something that turns out badly

Memecoin Revolution or Political Speculation? 

U.S. President Donald Trump and First Lady Melania Trump were among the prominent politicians who launched meme coins ahead of the presidential inauguration. The launch of $TRUMP and $MELANIA was supposedly intended to engage supporters and capitalize on crypto trends. 

Both the coins surged in value and immediately dropped after gaining traction. However, critics argued that these tokens provide no direct claims to the reserve for token holders, benefitting the Trump family to profit from political influence. Also in a recent interview, when questioned whether the launch of meme coins by the President and the First Lady make the SEC’s job difficult, Peirce stated that the meme coins do not come under the SEC’s jurisdiction or the current set of regulations.

Addressing the situation, D.C. Rep. Sam Licardo introduced a bill on 27 February, restricting politicians and officials from issuing or sponsoring securities and cryptocurrencies. The restriction extends even to their family members. In his recent X post, he criticized how Trump gained high yields before the dip of $TRUMP while nearly $800K suffered losses.  

Related: SEC Closes OpenSea Probe Without Action, Boosting NFT Market

SEC and Crypto

With President Donald Trump at the helm, the government took over a crypto-friendly stance toward the industry. Mark Uyeda’s appointment as the SEC chair and his announcement of the Crypto Task Force, have been aimed at providing clear regulatory guidelines on digital assets. Further, the SEC had withdrawn cases against major crypto firms like Coinbase, Gemini, Robinhood, and UniSwap. However, it remains to be seen whether this shift signals a long-term policy change or a temporary easing of enforcement. 

The post SEC Rules Meme Coins Are Not Securities Under Federal Law appeared first on Cryptotale.