Key Points:

• The Securities and Exchange Commission (SEC) has released its stance on memecoins, asserting they are not considered securities, thus offering no investor protections if investments fail.
• According to the SEC, memecoins are defined as tokens linked to internet memes, characters, or trends, and due to their limited utility, they do not qualify under the Howey Test.
• This clarification builds on earlier statements made by Commissioner Hester Peirce, reinforcing her point that many memecoins do not meet the criteria of securities.

The SEC’s Official Statement:

The SEC mentioned that memecoins are more akin to collectibles rather than securities and stressed that investors should be cautious about risks associated with their volatility.

Peirce advised, “If people want to buy a token or product lacking a clear long-term value proposition, they should feel free but should not be surprised if the price drops.”

Although this statement is not formal regulation, it is closely monitored by the industries governed by the SEC.

For further insights, view the SEC Staff Statement.