The Securities and Exchange Commission says it does not consider Memecoin as a securities, but it warns that fraudulent tokens could still be subject to enforcement action by other regulators.
The agency’s corporate finance division said in a statement on February 27 that Memocoin “is “not accompanied by the offer and sale of securities under federal securities laws” and “similar to the group.”
“So those participating in Memecoin offers and sales do not need to register a transaction with the Commission,” the SEC said.
He also said that Memecoin buyers and holders are not protected by U.S. securities laws, but that Memecoin’s fraudulent offers and sales could “be subject to enforcement or prosecution by other federal or state agencies.”
The SEC added that it shared its opinion, “as part of its efforts to make the federal securities laws more clear to Crypto Assets.”
US President Donald Trump has moved to cull the SEC’s regulatory oversight of the Crypto space. The agency launched a cryptographic task force last month to create a framework for digital assets.
Trump and first lady Melania Trump herself launched the memokine just days before entering the White House on January 20th, sparking criticism from many crypto commentators and Trump supporters.
According to Coingecko, Donald Trump’s Mimecoin, official Trump (Trump), has fallen nearly 83% since its peak, while Melania Trump’s token Melania Meme (Melania) has fallen 93.5% from its peak.
Trump Memocoin peaked at $73.43 a day before Trump took office, but is now trading at around $12.66. Source: Coingecko
The SEC statement came after ABC News reported that U.S. House Democrats would introduce a bill that would ban public servants, including the president, and prohibit security, merchandise or digital assets from supporting digital assets, including Mumekaine.
In its statement, the SEC said that Memecoin “usually limited or lacks functionality” and “prone to experience significant market price volatility.”
It added that Memocoin does not fit “any of the common financial instruments, such as inventory or bonds,” as “any of the common financial instruments listed specifically in the definition of “security” such as stocks and bonds” will not entitle “future income, profits, or assets.”
The SEC said Memocoin does not conform to the definition of “investment contracts” under the Howie test, which defines securities, defined as money invested in a common company, such as a business, where investors expect to benefit from the efforts of others.
Related: Former CFTC lawyer says agents should lead memo kinetic regulations
“The offer and sale of meme coins does not involve investment in the company, nor does it involve reasonable expectations of profits that can be obtained from the efforts of other entrepreneurs or management,” the agency said.
“In other words, meme coins themselves are not security.”
The SEC added that the statement does not apply to memokines that contradict one explanation or products labeled as Memecoin, in order to hide from securities laws “by disguising the products that constitute security.”
“The department evaluates the economic realities of a particular transaction,” he said.
Hester Perth, SEC committee member who leads the agency’s cryptographic task force, said earlier this month that many Memecoins “have no homes in the SEC under the current set of regulations.”
X-Hole of Frame: MemeCoins dies, Defi rises again – Sashaivanov
