Digital Assets

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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:

  1. Transactions in meme coins “do not involve the offer and sale of securities under the federal securities laws”;
  2. 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
  3. 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

As Bitcoin reaches prices not seen since November 2021, individuals and entities will undoubtedly consider selling – sometimes called “taking profit” on – Bitcoin and other digital assets to capture previously unrealized gains.  But crypto market participants should be aware of the U.S. tax implications of realizing gains on the sale of digital assets – more importantly, properly reporting such gains to the Internal Revenue Service (“IRS”).  As a recent U.S. Department of Justice (“DOJ”) Indictment makes clear, the willful failure to report such gains to the IRS may lead to potential criminal charges.Continue Reading DOJ’s First “Pure” Criminal Tax Charges in Bitcoin Case Signals Heightened Focus On Tax Reporting of Digital Asset Gains

On August 17, 2023, the U.S. District Court for the Western District of Texas granted summary judgment to the U.S. Department of the Treasury (Treasury) on all of the plaintiffs’ claims in the lawsuit challenging the Department’s Treasury’s Office of Foreign Assets Control’s (OFAC) designation of Tornado Cash, a purportedly decentralized cryptocurrency mixer that runs…

The International Swaps and Derivatives Association, Inc. (“ISDA”) continues to press forward with its digital asset working group, following the publication[1] in January this year of (i) the Digital Asset Derivatives Definitions (the “Definitions”) and (ii) the whitepaper on netting and collateral enforceability.

On May 3, 2023, ISDA published…

Bankruptcy filings in the digital asset space continue, as cryptocurrency exchange Bittrex filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Monday, May 8, 2023. The Bankruptcy Docket can be found here. Desolation Holdings LLC and its affiliated debtors, Bittrex, Inc., Bittrex Malta Holdings Ltd., and Bittrex Mala Ltd., as debtors and debtors in possession (“Bittrex US”) filed their chapter 11 petitions alongside a plan of liquidation. Unlike other exchanges that have sought to reorganize in fits and starts, Bittrex US heads directly to liquidation. Activities outside of the US, including Bittrex Global, shall continue uninterrupted by the filing.Continue Reading Bittrex: Regulatory Enforcement and Macroeconomic Headwinds Lead to Another Crypto Bankruptcy

Many of those active in the non-fungible token (NFT) market have been nervously anticipating action from the U.S. Securities and Exchange Commission (SEC) regarding whether or not they will categorize NFTs as securities and further regulate them. U.S. regulators have not yet definitely opined on whether NFTs in general are securities.  However, a recent ruling, Friel v. Dapper Labs Inc et al, U.S. District Court, Southern District of New York, No. 21-05837, may have set the stage for some much-needed clarity with respect to the legal characterization of NFTs.Continue Reading NFTs as Securities?

Following many months of discussion and review by a working group of traditional finance institutions and crypto-native exchanges and platforms led by the International Swaps and Derivatives Association, Inc. (“ISDA”), ISDA published the Digital Asset Derivatives Definitions (the “Definitions”) on January 26, 2023 for use with Bitcoin (BTC) and Ether (ETH)…