SEC says most meme coins are not securities

The Securities and Exchange Commission issued guidance Thursday evening saying it does not deem most meme coins securities under U.S. federal law.

“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,” the statement says. “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 clarification comes after the latest rapid rise of such cryptocurrencies following the election of President Donald Trump, as well as their crash in recent weeks. It’s also another notch in the belt of the new administration, which has promised to create clearer and perhaps more favorable regulatory conditions for the crypto industry, and do so swiftly.

The SEC describes meme coins as crypto assets inspired by internet memes, characters, current events, or trends and created to garner “an enthusiastic online community” to buy and trade them.

Because they “typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation … meme coins are akin to collectibles,” the statement says.

It goes on to say meme coins “typically have limited or no use or functionality … and often are accompanied by statements regarding their risks and lack of utility.”