#MemesNotSecurity
In a statement, the Wall Street regulator clarified "transactions in the types of meme coins described in this statement, do not involve the offer and sale of securities under the federal securities law," effectively stating that meme tokens were not securities and instead were "akin to collectibles."
Under the SEC's designation, coins like Dogecoin (#DOGE), Official Trump (#TRUMP), and other similar meme-based coins are non-securities.
⭐Key features of the SEC statement
The SEC's reasoning for designating meme tokens as non-securities focus on the following aspects:
· Definition of a security: According to the regulatory agency, a meme coin "does not constitute any of the common financial instruments" that securities laws enumerate. This also means meme coins aren't federally protected, which implies the SEC may not provide assistance to investors who incur major losses and want to pursue a certain individual or developer.
· What meme coins do not provide: The SEC went on to note that meme tokens do "not generate a yield or convey rights to future income, profits, or assets of a business."
· What investors actually invest in: As per the statement, the offer and sale of such cryptocurrencies do not involve investing in an enterprise and there is no "reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others," meaning the expectation of profits among investors is not derived from other people's efforts.
· Where value is derived: The SEC also explained that endorsers of meme tokens are not undertaking efforts to manage the assets of meme coin holders, and the value of meme tokens come from "speculative trading and the collective sentiment of the market."