tl;dr
The Securities and Exchange Commission (SEC) stated that meme coins, such as Dogecoin, are not considered securities under federal securities laws. The SEC's current interpretation of the Howey test indicates that meme cryptocurrencies, based on internet jokes and memes, do not meet the classificati...
The Securities and Exchange Commission (SEC) has declared that meme coins, such as Dogecoin, are not considered securities under federal securities laws. The SEC's current interpretation of the Howey test indicates that meme cryptocurrencies, based on internet jokes and memes, do not meet the classification of a security because they do not generate a yield or convey rights to future income, profits, or assets of a business. The statement also highlighted the volatility of meme coins, citing examples such as the TRUMP token, which experienced a significant value increase before crashing, and an instance where an Argentinian president faced fraud charges related to a meme coin. The SEC's stance on meme coins is seen as a shift from its previous crackdown on the crypto space, reflecting a more relaxed view under the current Republican administration.
Wall Street's top regulator has said that meme coins are not securities. In a Thursday statement, the Securities and Exchange Commission said that such assets typically would not be considered securities based on the regulator's current interpretation of the Howey test. Earlier this month, the SEC's new crypto task force boss said that meme coins were unlikely to fall under the watchdog's jurisdiction. "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," read the SEC's statement. It added that the law defines a security as a financial instrument such as a stock, note, or bond. Meme cryptocurrencies would not fit the classification as a security because they "do not generate a yield or convey rights to future income, profits, or assets of a business," the SEC said.
Meme coins and tokens are digital assets based on Internet jokes and memes, current events, celebrities, and more. Such cryptocurrencies are very volatile and can make investors huge gains—or devastating losses. Dogecoin is the first meme coin and still the most valuable by market cap, though there are now millions more on the market. The virtual tokens have hit headlines recently because President Donald Trump's team launched a Solana-based meme coin ahead of his January 20 inauguration. The token, TRUMP, shot up in value before crashing hard. It's currently trading for $12.60, down nearly 83% from its peak, CoinGecko shows. And earlier this month, Argentinian president Javier Milei advertised a meme coin on his X (formerly Twitter) account. He was hit with fraud charges as a result, and a judge is now investigating the scandal after investors alleged they had been scammed.
The SEC cracked down hard on the crypto space under its Biden-appointed former Chair, Gary Gensler. The watchdog alleged that many digital asset companies were selling unregistered securities. But now under Republican, crypto-friendly President Trump, the regulator is expected to take a more relaxed view towards the space, and has already scrapped a number of high-profile lawsuits and investigations.