Securities Commission notes that meme coins are not classified as securities, with Elon Musk comparing them to a casino.
The U.S. Securities and Exchange Commission (SEC) has taken a significant step in 2025, clarifying that most memecoins are not considered securities under federal law [1][2]. This decision marks a strategic pullback by the SEC from direct securities regulation of memecoins, instead emphasizing that tokens driven primarily by speculation and community sentiment fall outside its jurisdiction.
However, the SEC cautioned that tokens could be reclassified as securities if promoters engage in “managerial efforts” to profit, leaving the door open for future enforcement. Commissioner Caroline Crenshaw, who dissented from this decision, argued that the SEC’s ruling was “incomplete” and expressed concern that memecoins are still subject to securities laws in some circumstances [1].
With the SEC stepping back, regulatory enforcement roles are increasingly shifting to other bodies. The Commodity Futures Trading Commission (CFTC) may treat memecoins as commodities, addressing market manipulation. The Federal Trade Commission (FTC) targets deceptive marketing, while state regulators, notably New York’s NYDFS, are enacting laws to combat fraud, rug pulls, and impose severe penalties [1].
This results in a fragmented regulatory landscape with multiple agencies policing specific risks related to memecoins, which may challenge market participants with overlapping or inconsistent rules.
The implications of this guidance are far-reaching. The classification of memecoins as not securities legitimizes many tokens, boosting innovation. However, regulatory uncertainty remains, influencing token design and issuer behavior. The SEC’s cautious retreat contrasts with Commissioner Crenshaw’s call for a more comprehensive framework to safeguard investors, reflecting broader tensions within U.S. crypto regulation [1][5].
Meanwhile, the SEC under Chairman Atkins pushes initiatives like “Project Crypto” aiming for more streamlined regulation of crypto assets overall, which may affect future memecoin regulation [5]. Market participants must navigate this evolving environment where regulatory responsibility is diffused among agencies—impacting compliance, enforcement risk, and market dynamics [1][5].
In a separate development, Elon Musk and Joe Rogan discussed meme coins during an interview. Rogan expressed concerns about pump and dumps in meme coins and suggested regulation to curb such practices. Musk warned against betting heavily on meme coins [3]. Commissioner Crenshaw, who has been vocal about the prevalence of manipulation through pump-and-dumps and rug pulls in the meme coin market, has reservations about the SEC's new definition of meme coins [4].
References:
- SEC Guidance on Meme Coins
- Commissioner Crenshaw's Dissent
- Joe Rogan and Elon Musk Discuss Meme Coins
- Commissioner Crenshaw's Concerns about Meme Coins
- SEC's Project Crypto
