The U.S. Securities and Exchange Commission (SEC) has officially declared that most memecoins are not securities under federal law, providing long-awaited clarity for the crypto industry. The guidance, published by the Department of Corporate Finance, describes memecoins as "those that have limited or no functionality" and are more like "collectors’ items" than financial instruments, CNBC reports.
"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 SEC said in a statement. "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 SEC clarified that meme coins do not meet the traditional criteria for securities because they do not generate revenue and do not grant rights to income, shares in a company, or assets. The decision comes amid a surge in meme coin trading after the election of President Donald Trump, as well as their sharp decline in recent weeks. It also aligns with the new administration’s policy of creating a more transparent regulatory environment for the crypto market and limiting excessive enforcement.
Crypto industry leaders welcomed the SEC’s announcement. Ishmael Green, a cryptocurrency lawyer and partner at law firm Diaz Reus, called it a long-awaited move that will encourage further investment in the U.S. crypto market.
"The SEC’s recent statement on meme coins is the clarity that the digital asset space has been demanding for years," Green said. "This will drive continued investment in the U.S. crypto space, as the vast majority of meme coins launched in the last 12 months with multibillion dollar market caps have been released on Solana, an American blockchain."
Following the SEC announcement, Dogecoin, the most famous memecoin and the sixth-largest cryptocurrency by market capitalization, rose 3%, while Solana, which has become the primary platform for issuing meme coins, including Trump's official memecoin, rose 2%.
The SEC’s announcement could encourage crypto exchanges to list more meme coins without risking regulatory prosecution. Earlier this year, at the height of the Trump-related meme mania, Coinbase CEO Brian Armstrong noted that with about 1 million new tokens being created each week, individual analysis of them was becoming impossible, and regulators should take this into account.
Despite their high speculative risks, meme coins remain a significant segment of the crypto market. They are traded 3-4 times more actively than Bitcoin and Ethereum, making them attractive to retail investors looking for high-risk but potentially profitable opportunities.