The US Securities and Exchange Commission said on Thursday it will not classify most “meme coins” as securities under federal law

The US Securities and Exchange Commission said on Thursday it will not classify most “meme coins” as securities under federal law

The US Securities and Exchange Commission will not classify most “meme coins” as securities under federal law, the regulator said on Thursday, making a significant shift in its approach to cryptocurrency.

The SEC’s Division of Corporation Finance said in a staff statement that meme coins, which are inspired by internet memes and trends, are primarily purchased by individuals for entertainment and social purposes.

Moreover, the meme coins do not provide the potential for investing in a common enterprise with reasonable efforts to be made by the issuer, or a third party engaged by the issuer, to increase their value.

“Accordingly, the staff generally concludes that such meme coins would not be considered securities,” the SEC said.

The move departs from the SEC’s previous stance, which saw former chair Gary Gensler push for meme coins to be treated as securities due to their close ties to online communities and potential for price manipulation.

However, the SEC’s new chair Mark Uyeda, appointed by President Donald Trump earlier this year, has signaled a shift in policy.

“It’s time for the Commission to rectify its approach and develop crypto policy in a more transparent manner,” Uyeda said in a statement.

The SEC’s announcement comes amid other developments in the crypto space, including the launch of Trump’s own meme coin, $TRUMP, which has since lost billions in value, and the dismissal of the SEC’s lawsuit against Coinbase (NASDAQ:COIN).

The SEC had sued Coinbase and another crypto exchange, Binance, for operating without registering with the regulator, part of a broader crackdown on the industry that began last year.

The SEC’s move to provide guidance on meme coins comes after years of uncertainty, with varying interpretations among staff members.

The staff said it will not comment on offerings that deviate from the described characteristics or appear to be attempting to evade U.S. securities laws.

“The staff may also determine to comment on an offering if, based on the facts and circumstances presented, it appears that the manner in which the offering is being conducted may facilitate or encourage fraudulent activity,” the SEC said.