## SEC Declares Meme Coins as Non-Securities, Sparking Debate
On February 27, the U.S. Securities and Exchange Commission (SEC), through its Division of Corporate Finance, announced that meme coins do not qualify as securities, asserting that they lack any underlying value or function. This conclusion has drawn criticism from Caroline Crenshaw, an SEC Commissioner and Democrat, who believes the agency is overreaching its jurisdiction by excluding meme coins from its regulatory oversight. Crenshaw contends that the SEC has failed to provide a clear definition of what constitutes a meme coin, let alone justify their exclusion from the category of securities. “The guidance offers no clear definition,” Crenshaw stated, “from legal texts or even a basic dictionary. It generally describes a meme coin as an asset reflective of online or social trends, of speculative value, that tends to experience high volatility. But these characteristics are nearly universal among crypto assets.”
The Division of Corporate Finance explained that meme coins are primarily influenced by speculation, trends, and social media promotion, contrasting them with traditional securities like stocks and bonds, which are based on partial ownership in a company and income from dividends. The division also expressed concerns about the potential criminal activities associated with meme coins, suggesting that other agencies, rather than the SEC, should oversee these matters.
Meme coins are cryptocurrencies that originate from internet memes or jokes. They often gain traction through social media trends but fundamentally lack real-world value. Typically, owners purchase meme coins for entertainment or speculative purposes. “In this regard, meme coins are akin to collectibles,” the SEC division noted, indicating they have “limited or no use or functionality.” “Given the speculative nature of meme coins, they tend to experience significant market price volatility and are often accompanied by warnings about their risks and lack of utility, aside from entertainment or other non-functional purposes.”
Recent examples of meme coins include the $TRUMP and $MELANIA tokens, inspired by the Trump presidential campaign. These tokens aim to capitalize on the current political climate in the U.S., yet they highlight the absurdity of the concept, as they hold no intrinsic value whatsoever. Since the inception of meme coins, there has been a surge in their creation. These tokens frequently lack underlying value and offer little utility as cryptocurrencies, resembling trading cards or other collectibles.
The SEC’s announcement coincides with efforts by politicians to introduce regulations aimed at curbing the creation of meme coins. Californian politician Sam Liccardo is working to prevent elected officials from launching or promoting such tokens. This initiative arises in response to the Trump token, which has exhibited extreme price fluctuations and could potentially be exploited by politicians for personal gain at the expense of the public.
