A statement has been passed by the US Securities and Exchange Commission (SEC) clearly stating that meme coins like $DOGE and $SHIB do not fall under the category of securities under federal law.
The statement was issued on 27 February 2025 to give clarity to crypto users on meme tokens. SEC clarified that these meme coins have almost no functionality as they are created for entertainment purposes only.
SEC’s Statement On Meme Coins
SEC's Division of Corporate Finance has provided its outlook on the questions on meme coins like how to see these tokens from the federal point of view.
In crisp and clear words, the commission has made clear not to treat memecoin as a security. They don't provide any kind of fundamental value. Also, these tokens will never be considered as a source of generating income.
They are, moreover, considered as an investment made for social relevance or entertainment purposes rather than as an asset.
Also, SEC made it clear that memecoin investments would not be protected by federal securities laws. They are just similar to collectibles as they are purchased for entertainment, social interaction, and speculative purposes.
Impact On Meme Coins After SEC's Statement
SEC has made it clear that memecoin is a cryptocurrency created as a joke with no security for investors. Their statement serves as a warning to investors about investing in memecoins like Dogecoin, Shiba Inu, and Pepe Coin.
SEC's statement came amid increasing scrutiny of the meme coin sector. It follows several high-profile incidents, including the $4 billion valuation spike of the Milei coin and the recent security breach at Pump.Fun that led to the promotion of fraudulent tokens.
Meme coins will not be regulated by the U.S. Securities and Exchange Commission. So, investors should be careful before investing heavily in any memecoin.
