SEC determines that meme coins do not qualify as securities

The Securities and Exchange Commission recently issued updated guidance indicating that most meme coins, a type of cryptocurrency that originated from memes, are not considered securities under U.S. federal law. This means that individuals who purchase or hold meme coins are not protected by federal securities law, and transactions involving meme coins do not need to be registered with the Commission.

This announcement comes during U.S. President Donald Trump’s second term, where he established the Department of Government Efficiency, led by Elon Musk, an agency named after the meme coin, Dogecoin. Additionally, President Trump introduced a meme coin for his supporters called $TRUMP shortly before his inauguration, which has seen a significant decline in value since its peak.

Mark Uyeda, the SEC chairman appointed by Trump, signaled his intention to establish clear regulatory guidelines around cryptocurrencies. To this end, he formed a cryptocurrency task force on his first day in office. The SEC under Uyeda’s leadership asserts that meme coins are not classified as securities because they do not provide a yield or convey rights to future income, profits, or assets. Instead, they are viewed more as collectibles.

This latest stance on meme coins represents a departure from the previous approach under former SEC chairman Gary Gensler, who advocated for crypto tokens to be treated as securities. Gensler had urged crypto service providers to register with the SEC.

In a related development, the SEC announced the dismissal of its lawsuit against Coinbase, the largest cryptocurrency exchange in the United States. SEC Chairman Uyeda emphasized the need for the Commission to adopt a more transparent approach to developing crypto policy, moving away from relying primarily on enforcement actions to communicate its views on cryptocurrencies.

Overall, the SEC’s recent guidance clarifies its position on meme coins, distinguishing them from traditional securities. The evolving regulatory landscape surrounding cryptocurrencies underscores the importance of staying informed about developments in this rapidly changing industry.