SEC Excludes Meme Coins from Securities Classification, Claiming They Have No Value

The U.S. Securities and Exchange (SEC) Commission, on February 27, under the Division of Corporate Finance, announced that meme coins are not securities, claiming that they don't have any underlying value or function.

The U.S. Securities and Exchange (SEC) Commission has announced that meme coins are not securities, according to a report by CCN.

The Division of Corporate Finance at the SEC stated that meme coins don't have any underlying value or function, rendering them distinct from traditional securities. However, SEC Commissioner Caroline Crenshaw expressed disagreement with this conclusion.

Crenshaw, a Democrat, argued that the agency is overstepping its jurisdiction and should not exclude meme coins from SEC oversight. She further contends that the SEC has not provided an adequate definition of a meme coin, let alone made an argument for rejecting them as securities.

"The guidance offers no clear definition," remarked Crenshaw, "from law or even a basic dictionary. It generally describes a meme coin as an asset reflective of online or social trends, of speculative value, that tends to experience high volatility. But these are near universal hallmarks of crypto assets."

The Division of Corporate Finance reasoned that meme coins are mainly driven by speculation, trends, and social media promotion, while traditional securities like stocks and bonds are driven by part ownership in a company and income derived from dividends. The division also expressed concern over the criminal element surrounding meme coins, requiring other agencies, rather than the SEC, to monitor such issues.

Meme coins are cryptocurrencies that were created as internet memes or jokes. They are typically spread through social media as trends, and they fundamentally hold no real-world value. Owners usually buy meme coins for fun or speculation.

"In this regard, meme coins are akin to collectibles," stated the SEC division, adding that they have "limited or no use or functionality."

"Given the speculative nature of meme coins, they tend to experience significant market price volatility, and often are accompanied by statements regarding their risks and lack of utility, other than for entertainment or other non-functional purposes."

Recent examples of meme coins include $TRUMP and $MELANIA tokens, which were inspired by the Trump presidential campaign. These tokens aim to take advantage of the recent hype surrounding U.S. politics, but they only serve to highlight the absurdity of the concept, as they hold no intrinsic value.

Since the concept began, there has been an explosion of meme coins. The tokens often have no underlying value and are of little use as cryptocurrencies. In this respect, they do seem to resemble trading cards or other types of collectibles.

The SEC's announcement comes as politicians are trying to introduce regulations against creating meme coins. Californian politician Sam Liccardo is aiming to prevent elected officials from launching or promoting meme coins. The move is in response to the Trump token, which oscillated wildly and could be used by politicians to enrich themselves and defraud the public.