Key Takeaways
Key takeaway #1 — The SEC’s Division of Corporation Finance (the Staff) announced that it will not consider “meme coins” – as described in the Staff’s statement – as “securities” under federal securities laws, and therefore not subject to SEC jurisdiction.
Key takeaway #2 — The Staff views meme coin purchasers and holders as not protected by federal securities laws.
Key takeaway #3 — The Staff carefully noted that whether any specific meme coin is or is not a security under the federal securities laws depends on the specific facts relating to that meme coin and the circumstances of its offer and sale.
Key takeaway #4 —SEC enforcement involving meme coins is likely to be muted, but other state or federal agencies could use their authorities to bring enforcement against participants in meme coin fraud schemes, such as “pump and dumps” or “rug pulls.”
On February 27, 2025, the Staff issued a statement (the Staff Statement) clarifying the application of the federal securities laws to crypto assets, specifically “meme coins.” Meme coins are a category of cryptocurrency tokens typically driven by internet trends or popular culture (e.g., memes). The Staff said that it does not view transactions in meme coins (as described in the Staff Statement) as involving the offer or sale of securities under federal securities laws. However, the Staff Statement does not expressly state whether fraud or market manipulation occurring through or as part of meme coins would be subject to federal enforcement actions under federal securities laws.
The Staff noted that meme coins are “typically purchased for entertainment, social, or cultural purpose, with value driven by market demand and speculation.” As a result, the Staff views meme coins as similar to collectibles such as trading cards, items lacking use (or limited use) and/or functionality, yet having speculative interest. The Staff reached the following conclusions as to meme coins described in the Staff Statement:
- Transactions in meme coins “do not involve the offer and sale of securities under the federal securities laws”;
- Persons who participate “in the offer and sale of meme coins do not need to register their transactions with the Commission under the Securities Act of 1933 (Securities Act) or fall within one of the Securities Act’s exemptions from registration”; and
- Purchasers and holders of meme coins are not protected by federal securities laws.
Continue Reading SEC’s Corporate Finance Staff Issues Statement That Meme Coins Are Not Securities