.svg)
The US Securities and Exchange Commission (SEC) has announced that meme coins, such as the one issued by President Trump, are akin to "collectibles" and will not be considered "securities".
In an effort to provide greater clarity on the relationship between crypto-assets and federal securities laws, the SEC’s Division of Corporation Finance has issued a staff statement on meme coins.
The statement recognises that meme coins are typically purchased for “entertainment and cultural purposes”, and that their value is driven primarily by "market demand and speculation".
The SEC staffers also note that meme coins typically have “no use or functionality”, and that their issuance is often accompanied by warnings that the coins have no intrinsic value and will experience significant price volatility.
“It is the Division’s view that transactions in the types of meme coins described in this statement do not involve the offer and sale of securities under the federal securities laws,” they said.
“As such, persons who participate in the offer and sale of meme coins do not need to register their transactions with the commission.
“Accordingly, neither meme coin purchasers nor holders are protected by the federal securities laws.”
The statement follows the SEC’s decision to drop multiple enforcement actions against crypto firms that were previously charged with violating federal securities laws.
As covered by Vixio, firms such as Coinbase, Binance, UniSwap Labs and OpenSea are set to benefit from the SEC’s change of approach under President Trump.
Coinbase and Binance had been charged with operating as unregistered securities exchanges, brokerages and clearing agencies, while UniSwap Labs and OpenSea were likely to be charged with the same.
At the end of last week, Gemini joined them, becoming the latest crypto exchange to announce that the SEC has closed an investigation into its potential violation of federal securities laws.
Tyler Winklevoss, co-founder and CEO of Gemini, described the investigation as a “sham” and thanked the SEC’s new leadership for closing the case.
He also said the SEC should compensate Gemini by reimbursing its legal costs, and should “dishonorably discharge” all staff who worked on the investigation and similar enforcement actions.
“Please publish their names to your website, and institute a lifetime ban for all them with regard to ever working at the agency again,” he said.
“This will start to make amends for the damage you have done to us, our industry, and America.”
SEC adopts Coinbase’s legal argument on securities
The SEC’s shift in approach means that most crypto-assets are likely to be regulated as commodities in future, in line with several key legislative proposals on digital asset market structure.
It is also noteworthy that the language of securities as “collectibles” was used by Coinbase during its defence against the SEC.
In 2023, Coinbase argued that crypto-assets are not securities because they are not “investment contracts”, and they do not presuppose an expectation of profit derived from an underlying business activity.
Instead, Coinbase argued, crypto-assets are more like collectibles, where the buyer pays money for an asset in the hope that it might increase in value — but not as part of an investment contract.
“On Coinbase’s secondary market exchange, there is no investment of money coupled with a promise of future delivery of anything,” it said. “There is an asset sale. That’s it.
“It is akin to the sale of a parcel of land, the value of which may fluctuate after the sale. Or a condo in a new development. Or an American Girl Doll, or a Beanie Baby, or a baseball card.”
