The U.S. SEC Division of Corporation Finance issued new guidance stating that meme coins like Dogecoin, Shiba Inu, Official Trump, and Official Melania are not securities.
The division made the assertion in a statement yesterday, emphasizing that meme coins are not securities under federal securities laws. Instead, it categorized these assets as collectibles due to their speculative nature.
🚨NEW: The @SECGov Division of Corporation Finance has just put out guidance on memecoins saying they are NOT securities and are akin to collectibles.
“It is the Division’s view that transactions in the types of meme coins described in this statement, do not involve the offer…
— Eleanor Terrett (@EleanorTerrett) February 27, 2025
According to the statement, meme coins are tokens inspired by cultural events, internet memes, or trends purchased mainly for entertainment and social engagement purposes rather than investment.
Additionally, it notes that since meme coins lack inherent utility, their values are driven by speculation and market demand.
Meme Coins Fail Howey Test
Consequently, the commission emphasized that meme coins do not meet the requirements of the Howey Test, a longstanding securities test.
In particular, the statement notes that meme coin purchasers are not investing in an enterprise. Hence, they cannot expect profit from the efforts of others.
Since meme coins are not securities, the SEC emphasized that related transactions do not require registration. Therefore, U.S. federal securities laws do not protect meme coin holders and purchasers.
Notably, the SEC clarified that its assertion does not apply to meme coins that do not meet the above description. Despite acknowledging that meme coins are not securities under federal law, it warned that fraudulent activity relating to the offer and sale of these assets may be subject to enforcement actions by other state and federal agencies.
Previous Stance on Meme Coins
The statement clarifies the SEC’s stance on meme coins, such as SHIB, DOGE, TRUMP, and MELANIA. This marks a shift from Gary Gensler’s broader view of crypto assets, which saw him classify all cryptocurrencies—except Bitcoin—as securities.
Although the SEC has not classified meme coins as securities in its past enforcement actions against the industry, Gensler’s statement casts regulatory uncertainty over these assets.
The SEC’s clarification comes a month after U.S. President Donald Trump launched the TRUMP meme coin. His wife also followed suit and launched her own meme coin, MELANIA.
These meme coins have plunged heavily from their peak prices over the past few weeks. While TRUMP is down 84.89% from its ATH of $75.35 to $11.35, MELANIA is currently down 94% from its peak price of $13.73 to $0.8096.
Potential Approval of Meme Coin-Related ETFs Soar
Meanwhile, the SEC’s position on meme coins indicates they have a better chance of being approved for an ETF. Notably, the previous SEC administration refused to acknowledge ETF filings relating to assets classified as securities.
This was observed last year when Gensler’s SEC refused to acknowledge Solana ETF applications due to the securities tag given to SOL in the Binance and Coinbase lawsuit.
Prospective issuers seek to launch ETFs around meme coins like DOGE and TRUMP. The SEC has acknowledged some of these applications, including Grayscale’s DOGE ETF filings.
Now, the SEC’s recent clarification that meme coins are not securities bolsters the chances of these assets being approved for ETFs.
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