The post SEC’s Division of Corporation Finance says memecoins are not securities appeared on BitcoinEthereumNews.com.

Memecoins may not be subject to United States securities laws, according to a recent statement from the Securities and Exchange Commission. On Feb. 27, the commission’s Division of Corporation Finance addressed a long-standing debate over whether cryptocurrencies—particularly memecoins—fall under federal securities laws.  The current SEC views memecoins as more like collectibles than investments and claims they don’t meet the definition of a security under the Howey test. “Memecoins typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation. In this regard, memecoins are akin to collectibles,” SEC officials wrote in a recent staff statement. According to the commission, meme coins aren’t part of a larger enterprise. There’s no central team pooling funds to develop a business, and buyers aren’t investing in a structured project expecting long-term growth. It added that memecoins derive their price movements from “market demand and speculation” rather than the “entrepreneurial or managerial efforts of others.”  Since their value is tied to hype and collective sentiment—much like collectibles—the agency said they fail to meet the Howey test’s criteria for an investment contract. “Persons who participate in the offer and sale of meme coins do not need to register their transactions with the Commission,” the SEC said, but added that fraudulent activity wouldn’t go unnoticed. The agency warned that scams involving memecoins could still face enforcement from other federal or state regulators. While the tokens themselves may not be securities, misleading investors or engaging in deceptive practices could still land projects in legal trouble. It also stressed that the statement only applies to meme coins that fit its description, and tokens disguised as memecoins to sidestep securities laws could also be subject to regulation, depending on their structure and purpose. However, the agency noted that its views…

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Filed under: News - @ February 28, 2025 7:27 am