Nikolas Sargeant
The US Securities and Exchange Commission has officially classified meme coins as collectibles rather than securities, clarifying their regulatory approach to these speculative digital assets.
Regulatory Clarity Emerges for Digital Collectibles
The US Securities and Exchange Commission published a definitive staff statement on Thursday confirming that meme coins do not fall under securities regulations. This guidance aims to clarify how federal securities laws apply to the growing meme coin sector. "[Meme coins] do not involve the offer and sale of securities under the federal securities laws," the agency stated explicitly. "As such, persons who participate in the offer and sale of meme coins do not need to register their transactions with the Commission."
The SEC emphasized an important caveat for investors: buyers and holders of these coins aren't protected by federal securities laws. The agency's Division of Corporation Finance noted that meme coins—crypto assets based on viral internet memes or inside jokes—"typically have limited or no use or functionality," failing to meet the definition of an "investment contract" under the Howey Test used to identify securities.
Entertainment Value Drives Collectible Classification
Meme tokens, including the pioneering Dogecoin, originated as recreational projects purchased primarily for entertainment. Their valuation stems from market demand and speculation rather than underlying utility or revenue potential.
"In this regard, meme coins are akin to collectibles," the SEC's statement explained. "Given the speculative nature of meme coins, they tend to experience significant market price volatility, and often are accompanied by statements regarding their risks and lack of utility, other than for entertainment or other non-functional purposes."
The agency clarified that meme coin value depends on speculative trading and collective market sentiment, similar to traditional collectibles—items that acquire worth beyond their initial price due to popularity. This perspective aligns with crypto entrepreneur David Sacks' recent characterization of non-fungible tokens (NFTs) and meme coins as "collectibles" akin to "baseball cards or stamps" that people purchase to commemorate something specific.
Regulatory Framework Continues to Evolve
The SEC's position reflects earlier comments from Commissioner Hester Peirce, who leads the agency's newly-established Crypto Task Force. Peirce previously indicated that meme tokens likely fall outside the SEC's jurisdiction.
In a Bloomberg interview, Peirce addressed regulatory concerns by stating, "We always have to look at the facts and circumstances, but many of the memecoins that are out there probably do not have a home in the SEC under our current set of regulations." She suggested that the Commodity Futures Trading Commission (CFTC) might be better positioned to address meme coin oversight, emphasizing that "many of those, I think, are probably not within our jurisdiction."
