The US Securities and Exchange Commission’s (SEC) Division of Corporation Finance has clarified that meme coins are not considered securities, exempting them from registration under the Securities Act of 1933. The announcement follows the release of former President Trump’s meme coin, $Trump, which crashed shortly after its launch.
Meme coins, inspired by internet memes and cultural trends, are primarily purchased for entertainment or social engagement. The SEC likened them to collectibles, noting their value is driven by market demand and speculation, often resulting in significant price volatility.
The SEC applied the Howey Test, concluding that meme coins do not qualify as securities because they lack a common enterprise and do not generate profits from others’ efforts. However, the SEC warned that fraudulent activities involving meme coins could still face enforcement under other federal or state laws.
The statement also cautioned against crypto assets falsely labelled as meme coins to evade securities regulations, emphasizing that the SEC will continue to evaluate transactions on a case-by-case basis.