The SEC has released an official statement confirming that memecoins are not considered securities under US federal law. This is a significant announcement as it provides clarity on the application of securities laws to crypto assets.
SEC and Memecoins: Official Stance
The SEC explained that memecoins are assets inspired by internet memes, characters, current events, or trends, intended to attract an active online community for purchase and exchange. Memecoins are often purchased for entertainment, social interaction, or cultural purposes. Their value is primarily driven by market demand and speculation, similar to collectibles. The SEC notes that memecoins have limited or no use and do not require registration with the SEC.
Memecoins and Investor Protection
The SEC also stated that memecoin buyers and holders are not protected by federal securities laws. Since memecoins are not considered securities, they do not generate yield or convey rights to future income, profits, or assets of a business. The SEC remarked that its conclusions do not extend to memecoin offerings or sales that do not fit the previously described characteristics, or to products labeled as memecoins solely to evade securities law applications.
Memecoin Sector Drops Amidst Crypto Liquidations
Today, the memecoin sector sharply dropped, down by 8.6% in the past 24 hours, despite general crypto liquidations of 7.8%. However, some memecoins, like The Martian Dog and RONKE, are still trading in the green, with gains of over 176% and 125%, respectively. Other memecoins, such as DOGE and SHIB, experienced declines of 11% and 15%, respectively.
The SEC's official statement helps clarify the position of memecoins in the crypto asset market, providing some clarity for market participants. Nevertheless, the sector remains subject to price fluctuations and speculation.
