SEC Commissioner dissents on agency’s memecoin stance

US Securities and Exchange Commission Commissioner Caroline Crenshaw issued a dissenting opinion on the SEC’s recent stance that memecoins are not securities.

According to the commissioner’s Feb. 27 statement, memecoins could satisfy the Howey test’s condition of profiting from the managerial efforts of others due to the coordination between developer teams and promoters.

The commissioner added that most, if not all, cryptocurrencies could be defined as memecoins under the SEC’s recent guidance, which was released on the same day. In this guidance, the agency stated that memecoins represent online social trends with speculative value and high volatility — and are not securities. Commissioner Crenshaw, however, has a different viewpoint:

“Today’s statement paints meme coins as cultural projects whose purpose is entertainment and social engagement. The reality is that meme coins, like any financial product, are issued to make money.”

Memecoins have come into sharper focus following several high-profile scams, hacks and even presidential memecoin launches that threaten the long-term viability of the sector and invite scrutiny from state officials.

Related: Solana’s token minting frenzy loses steam as memecoins get torched

US regulators and lawmakers attempt to reign in memecoins

Following US President Donald Trump’s memecoin launch, several Democrat lawmakers, including Elizabeth Warren, called for an investigation into potential ethics violations of the presidential token.

On Feb. 27, California Member of Congress Sam Liccardo announced that House Democrats are prepping a bill that would ban presidential memecoins.

The proposed bill, titled “The Modern Emoluments and Malfeasance Enforcement (MEME) Act,” would prohibit US lawmakers from sponsoring, issuing or endorsing any digital asset.

Moreover, spouses and dependents of US representatives, the president, vice president and senior executive branch officials are also prohibited from issuing or sponsoring memecoins under the bill.

Attorney Elizabeth Davis, former chief attorney at the Commodity Futures Trading Commission (CFTC), recently argued that memecoins should be regulated by the CFTC.

Davis told Cointelegraph that if the commodities regulator is granted regulatory oversight over crypto, then there is a strong likelihood that memecoins will be included in their purview.

The attorney also expressed confidence that comprehensive memecoin regulations would be established in the United States over the next year — putting an end to the regulatory ambiguity surrounding social tokens.

Magazine: Memecoins: Betrayal of crypto’s ideals… or its true purpose?