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SEC says memecoins are not securities

SEC says memecoins are not securities

GrafaGrafa2025/02/28 07:00
By:Liezl Gambe

The Securities and Exchange Commission (SEC) has announced that memecoins do not fall under the purview of federal securities laws, as they are more akin to collectibles.  

However, the agency cautioned that fraudulent activities involving memecoins could still face enforcement actions by federal or state authorities.  

The SEC's Division of Corporation Finance stated on February 27 that memecoins generally do not involve the offer and sale of securities.  

As such, those participating in the offer and sale of memecoins are not required to register their transactions with the Commission.  

The SEC added that memecoin buyers and holders would not be protected by U.S. securities laws.  

According to the SEC, memecoins typically have limited or no use or functionality and tend to experience significant market price volatility.  

The SEC has likened memecoins to collectibles, emphasising their speculative nature and price volatility.  

They do not provide a yield or rights to future income, profits, or assets of a business.  

The SEC clarified that a memecoin does not fit the definition of an "investment contract" under the Howey Test, as it does not involve an investment in an enterprise with a reasonable expectation of profits derived from the efforts of others.  

The agency stated that labeling a financial product as a "memecoin" does not exempt it from securities regulations if its economic realities indicate otherwise.  

The SEC's stance follows comments from Commissioner Hester Peirce, who leads the agency's Crypto Task Force, suggesting many memecoins do not fall under the SEC's current regulations.  

This announcement has broad implications for the crypto market, where memecoins have evolved into multi-billion-dollar assets.  

Following the SEC's announcement, Dogecoin (CRYPTO:DOGE) and Shiba Inu (CRYPTO:SHIB) experienced sharp price increases and surges in trading volume.  

The DOGE/BTC and SHIB/ETH trading pairs also saw significant volume increases.  

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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