Are Memecoins Beyond Traditional Regulation? SEC Labels Meme coins as ‘Mere Collectibles’

 Let’s explore why the SEC classifies DOGE, SHIB, and TRUMP meme coins as collectibles, not securities
The U.S. Securities and Exchange Commission (SEC) has clarified that cryptocurrencies such as Dogecoin (DOGE) and Shiba Inu (SHIB), together with TRUMP and MELANIA coins, do not fall under the classification of securities. The ruling positions them in the collectible category, where people purchase either for entertainment factors or cultural motives instead of traditional investments with ownership potential and future profit expectations. 

<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>🚨NEW: The <a href=”https://twitter.com/SECGov?ref_src=twsrc%5Etfw”>@SECGov</a> Division of Corporation Finance has just put out guidance on memecoins saying they are NOT securities and are akin to collectibles. <br><br>“It is the Division’s view that transactions in the types of meme coins described in this statement, do not involve the offer…</p>&mdash; Eleanor Terrett (@EleanorTerrett) <a href=”https://twitter.com/EleanorTerrett/status/1895224363089084879?ref_src=twsrc%5Etfw”>February 27, 2025</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>

Why the SEC Ruling Says Memecoins Aren’t Securities

The SEC has based its decisions about security status on the “Howey Test,” which serves as a legal criterion for classifying assets. For an investment to qualify as a security, it must fulfill four main requirements. They include:

• It should be funded by monetary contributions.
• It should involve a shared enterprise 
• It should produce profits.

The SEC claims meme coins do not pass the regulatory securities evaluation through various inspection points. First, the buyers make no investments in enterprises that developers operate to generate profits. Secondly, speculative trading gains attributed to hype and social trends do not stem from development team entrepreneurship and management activities. The SEC views meme coins as collectibles instead of investments because they have no practical utility, earning abilities, or developer-backed enterprise framework. Thus, memecoin investors receive no federal securities protections since the SEC prohibits intervention during their loss experience.

Navigating the Regulatory Tightrope: Opportunities and Warnings

Memecoin projects can take advantage of this new classification because of its potential benefits. The exemption removes them from security regulations, allowing for more innovation and increased adoption potential. Ishmael Green, a crypto lawyer, thinks that the recent ruling will boost American investment because Solana has launched coins valued at over $1 billion. The SEC’s decision to drop legal action against exchanges Coinbase and Gemini creates positive signs about their potential renewed stance on the cryptocurrency market.

The SEC has officially stated that it intends to file legal charges against all fraudulent memecoin activities. Despite lacking security status under the regulatory statutes, scams and deceptive practices remain enforceable by governmental authorities. Khurram Dara, a lawyer from Bain Capital Crypto, stated ‘’that meme coin-related scams will be considered illegal by authorities.’’ This means that although meme coins enjoy regulatory exemptions for their status as investments, they can become target areas for strict government oversight about their actual use.

The Political Memecoin and the “MEME Act”

California Representative Sam Liccardo told ABC News that House Democrats are preparing to introduce the Modern Emoluments and Malfeasance Enforcement (MEME) Act. This act will ban top US officials and their families from creating or profiting from personal meme coins. According to Liccardo, public officials must refrain from leveraging their offices to gain personal benefits. He also doubts these coins’ effects on insider trading and monopoly control. The MEME Act recognizes expanding worries about abusive practices while emphasizing essential ethical standards for cases where politics intersects with meme coins.