TLDR
- SEC Division of Corporation Finance determines memecoins fall outside securities framework
- Decision based on memecoins’ primary use for entertainment and social purposes
- Trump and Milei controversies highlight ongoing political entanglement with memecoins
- Fraudulent activities still subject to regulatory oversight
- Marks clear policy shift from previous SEC leadership
The SEC’s Division of Corporation Finance released new guidelines on February 27, 2025, declaring that memecoins generally don’t require securities registration. This marks a fundamental change in how these digital assets are viewed by regulators.
The division’s statement focuses on the social nature of memecoins. These digital tokens serve primarily as tools for entertainment and community engagement.
Market forces, rather than business development, drive memecoin prices. This characteristic sets them apart from traditional securities that rely on company performance.
The division compared memecoins to collectibles. Their value comes from public interest and trading activity, not from structured business operations.
Under the new guidelines, memecoin creators can operate without SEC registration. This removes a major regulatory hurdle for the memecoin community.
The Howey test, used to identify securities, doesn’t apply to most memecoins. These tokens lack the investment contract elements central to securities classification.
Buyer behavior influenced this decision. The division noted that people buy memecoins for social and cultural reasons, not as traditional investments.
The guidelines specifically address community-driven tokens. Traditional business ventures disguised as memecoins will still face SEC scrutiny.
Other regulators maintain authority over fraudulent activities. The SEC division made clear that scams and deception will still face consequences.
Recent Events
The Trump team recently launched their own memecoin. The TRUMP token on Solana saw an 83% price drop after its initial surge.
Argentina’s crypto scene faced controversy. President Milei’s memecoin promotion triggered fraud investigations and legal challenges.
Democratic lawmakers proposed the MEME Act. This legislation aims to prevent government officials from promoting meme-based tokens.
The crypto market continues adapting to these changes. Trading platforms and developers are reviewing their practices under the new framework.
Previous SEC leadership under Gary Gensler took a stricter approach. Most cryptocurrencies faced potential securities classification during his tenure.
The Ripple Labs case highlighted past regulatory conflicts. Though XRP gained some legal clarity in 2023, appeals continue.
Current SEC leadership shows a different perspective. Several crypto-related lawsuits from the previous administration have been dropped.
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