The U.S. Securities and Exchange Commission (SEC) has stated that meme coins like TRUMP are not considered securities. This means that these coins, which are often more about fun than serious finance, fall outside the traditional rules for financial instruments. But beware: the SEC warns that fraud can still be severely punished. What does this mean for the broader market?
According to the SEC, meme coins do not fit into the picture of the Securities Act of 1933. Why not? They do not confer rights to dividends, income, or a share in a company – things you see with stocks or investment contracts. “These are more collectibles than investments,” says the SEC. This exempts creators and traders from the obligation to register, which removes a significant hurdle. But there is a downside: investors lose the protection that the SEC normally provides. No safety net if things go wrong – and with meme coins, where pump-and-dump tricks are not uncommon, that’s a real risk.
The fact that meme coins are not securities does not mean that anything goes. The SEC makes it clear: “Fraud or deception around meme coins can still have legal consequences.” Other government agencies, such as the Commodity Futures Trading Commission (CFTC) or state authorities, can intervene if there is tampering. Think of false promises or scams – that remains a red line. For XRP holders ($2.19), this is a side comforting signal: Ripple’s focus on stable use cases like RLUSD contrasts with the wild meme coin world, but market volatility affects everyone.
Before this SEC decision, Democratic representatives were already taking action with the Modern Emoluments and Malfeasance Enforcement (MEME) Act. This bill, led by Sam Liccardo from California, wants to prohibit members of the government from creating or promoting meme coins. The timing is no coincidence: Trump’s TRUMP coin, launched just before his inauguration, is under fire. Liccardo calls it an ethical minefield – a president making money from his position? That smacks of conflict of interest. The law has not yet passed the Republican-controlled Congress, but it shows how politics and crypto are becoming increasingly intertwined.
The crypto world is divided in its response. Ishmael Green, a lawyer specializing in crypto, sees opportunities: “This could encourage platforms like Coinbase and Robinhood to list meme coins, especially on American blockchains like Solana.” That could give trading a boost. But not everyone is cheering. Some believe the SEC is too soft – without regulation, the meme coin market could become an even bigger hotbed of scams.
Dogecoin
Shiba Inu
Pepe
dogwifhat
Bonk
FLOKI
Bitcoin
Ethereum
Tether
Solana
XRP
Cardano
