SEC Division Says Most Meme Coins Are Collectibles, Not Securities

The Securities and Exchange Commission’s (SEC) Division of Corporation Finance said Friday (Feb. 28) that most meme coins are not securities.

Most meme coins are more like collectibles and are often said to be for entertainment and other non-functional purposes, the Division said in a staff statement.

“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,” the statement said. “As such, 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. Accordingly, neither meme coin purchasers nor holders are protected by the federal securities laws.”

The statement noted that this represents the views of the Division’s staff and is not a rule, regulation, guidanceor statement of the SEC. It added that the determination of whether a specific meme coin is a security depends on the coin and how it is sold.

“Further, although the offer and sale of meme coins may not be subject to the federal securities laws, fraudulent conduct related to the offer and sale of meme coins may be subject to enforcement action or prosecution by other federal or state agencies under other federal and state laws,” the statement said.

This statement came a day after the SEC dismissed its pending civil enforcement action against cryptocurrency exchange Coinbase and said it is working to reform its regulatory approach to the crypto industry. The SEC sued Coinbase in June 2023, alleging that the crypto exchange violated securities laws.

On Monday (Feb. 24), Robinhood said it got a letter from the SEC informing the company that the commission concluded its investigation into Robinhood’s cryptocurrency unit and had no plans to follow up with enforcement action.

When the SEC announced its launch of a crypto task force on Jan. 21, the commission said the task force will focus on developing a “comprehensive and clear” regulatory framework for crypto assets.