SEC: Memcoins are not subject to securities regulation
By ForGeeks The U.S. Securities and Exchange Commission (SEC) has said that memcoins are not subject to federal securities laws. In new guidance, the SEC explained that these cryptocurrencies are more akin to collectibles than financial assets.
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Why the SEC doesn’t consider memcoins to be securities
According to the SEC’s statement, most memcoins do not provide income, rights to profits or company assets, and thus cannot be recognized as securities. The Commission emphasized that such digital assets don’t require mandatory registration because they do not meet the criteria for investment instruments.
The SEC also emphasized that such digital assets do not require mandatory registration because they do not meet the criteria for investment instruments.
SEC defines memcoins as collectible tokens that generally have no or very limited practical value. Their value is derived mainly from market demand and speculation, rather than being tied to a business model or real profit.
Collectible tokens.
Relationship to the rise of political memcoins
This SEC statement comes amid a surge of new memcoins launched in the wake of Donald Trump’s election victory. For example, the acronym DOGE, which stands for one of his administration’s agencies, is likely inspired by the popular cryptocurrency Dogecoin, which has been heavily backed by Elon Musk.
An acronym for one of his administration’s agencies.
In addition, Donald Trump and his wife Melania issued their own memcoins in January 2024, but their value plummeted shortly after launch.
How this will affect cryptocurrency regulation
The SEC’s new clarification could change the rules governing the cryptocurrency market and protect memcoin creators from potential lawsuits. Memcoins are often the target of schemes «pump and dump»where the price of a token is artificially inflated for quick profits for insiders.
A new SEC clarification could change the rules governing the cryptocurrency market and protect memcoin creators.
SEC emphasizes that memcoins are typically purchased for entertainment, participation in Internet culture, and social interactions, and their value is determined solely by market hype. Because of this, they are subject to extreme price fluctuations and high levels of risk.
Conclusion
SEC has officially recognized that memcoins are digital collectibles rather than financial assets. Their speculative nature and lack of attachment to income or real assets allows them to avoid regulation by federal securities laws. However, that doesn’t mean memcoin investors are immune from financial risks – on the contrary, their high volatility makes such assets highly unpredictable.
The SEC: Memcoins are not subject to securities regulation was first published on ITZine.ru.
Material ITZine.ru.
