Meme Coins Are Not a Securities Category, According to the SEC

Bittime - The United States Securities and Exchange Commission (SEC) recently issued official guidance stating that most meme coins are not considered securities under US federal law. 

SEC: Memecoins Are Not Securities

In the guidance, the SEC explains that meme coins, which originated as an internet joke or meme, are more akin to collectibles than financial instruments such as stocks or bonds.

New SEC Guidance About Meme Coin

According to the SEC, transactions involving meme coins does not meet the criteria for an offer or sale of securities under the Securities Act of 1933. Therefore, the party offering or selling meme coins are not required to register their transactions with the SEC. 

This also means that buyers and holders of meme coins are not protected by federal securities laws.

This guide is based on that analysis meme coins does not generate profits, does not provide rights to future business income or assets, and does not involve joint investments managed by third parties.

Instead, value meme coins tends to be driven by market demand and speculation rather than the managerial efforts of its developers.

Changes in Regulatory Approach

This latest guidance marks a significant change compared to the SEC's previous approach under Gary Gensler. In the past, Gensler has often called for all crypto tokens, including meme coins, treated as securities. However, under the leadership of Chairman Mark Uyeda, the SEC is taking steps to provide greater regulatory clarity for the crypto industry.

Uyeda emphasized that this new outlook aims to create a more transparent and inclusive crypto policy. 

He also stated that this step was a response to public demand to end law enforcement actions that were considered to be hampering innovation in the crypto sector.

Read too SEC Chairman Gary Gensler Asked to Resign Before Being Fired

Meme Coins Are Collectibles, Not Securities

The SEC stated that meme coins looks more like a collectible because it doesn't meet the internal requirements of the Howey Test, which is a legal tool for determining whether an asset is an investment contract. 

Additionally, the SEC confirmed that although most meme coins are not subject to securities laws, fraudulent activities related to meme coins may remain subject to legal action under other federal or state laws.

Read too XRP ETF Latest Info: SEC Begins Review Process!

Conclusion: New Clarity for the Crypto Industry

This new guidance from the SEC provides the clarity the crypto community has been waiting for. By stating that most meme coins is not a security, the SEC paves the way for further innovation in the sector without excessive regulatory barriers. 

However, investors are still advised to exercise caution as federal legal protection for these assets is very limited.

Read too Grayscale Files Official XRP and Dogecoin ETF with SEC

FAQ About Meme Coin and SEC Regulations

1. What does the SEC say about the legal status of meme coins?

The SEC stated that most meme coins are not considered securities under US federal law, so the transactions involved meme coins does not need to be registered with the SEC.

2. Why does the SEC consider meme coins not securities?

The SEC argues that meme coins do not generate profits or provide rights to future business income, so they are more similar to collectibles than investment instruments.

3. What impact will the SEC's new guidance have on the crypto industry?

This guidance provides greater clarity for the crypto community and opens up opportunities for innovation without the constraints of strict regulations, although investors should still be careful regarding the risk of fraud.

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Reference

Maxwell Zeff, SEC says meme coins are not securities, Accessed March 3, 2025

Author: IN