Over a decade ago, Dogecoin was launched as a joke,[1] lampooning the speculation around cryptocurrencies of the time and playing off the popular Doge[2] internet meme. Dogecoin is credited as being the first “meme coin,” a digital asset that draws on hype and community enthusiasm around popular memes, current events, or other trends – but with a current market cap hovering around $30 billion, it is no joke. Despite ongoing debate over their status as securities or applicable regulations, meme coins have become popular as speculative collectibles. Yet, the Securities and Exchange Commission’s new administration is softening its stance toward meme coins.
Much Clarity, Very Relief: SEC Staff Explain Views on Meme Coins
On Feb. 27, 2025, the SEC’s Division of Corporation Finance issued a Staff Statement on Meme Coins, clarifying how the agency views “meme coins” under U.S. securities laws.[3] The Statement explains that SEC staff now consider most meme coins not to be securities, distinguishing them from other digital assets that require SEC registration or compliance.[4] The Statement defines meme coins as “a type of crypto asset inspired by internet memes, characters, current events, or trends for which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading.”[5] The Statement also recognizes that these speculative assets are volatile, lack utility, and are purchased for entertainment or social value – “akin to collectibles.”[6] This also means that “neither meme coin purchasers nor holders are protected by the federal securities laws.”[7]
The rationale for this position is that a meme coin does not “constitute any of the common financial instruments specifically enumerated in the definition of ‘security’ [under the Securities Act of 1933 or the Securities Exchange Act of 1934] because, among other things, it does not generate a yield or convey rights to future income, profits, or assets of a business.”[8] The Statement goes on to explain that the offer and sale of the typical meme coin “does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”[9] In justifying this conclusion, the Statement explains that purchasers are not pooling their funds to be deployed by promoters or others to develop the coin or a related enterprise; that the value of meme coins is derived from speculative trading and collective sentiment, like a collectible; and the promoters of the meme coin are not undertaking managerial and entrepreneurial efforts that would create a reasonable expectation of profits.[10]
At the same time, simply calling something a “meme coin” does not automatically exempt it from regulation. In issuing its guidance, the SEC still warns that it is the economic realities of a transaction that drive the analysis under Howey[11] and that the Statement does not apply to “products that are labeled ‘meme coins’ in an effort to evade the application of the federal securities laws by disguising a product that would otherwise constitute a security.”[12]
Commissioner Crenshaw Asks: “What Does it Meme?”
While the Statement provides a helpful explanation of how the SEC might treat the typical meme coin, it does not wholly remove the uncertainty about whether its guidance could apply to a broader range of digital assets. In a dissenting statement, Commissioner Caroline Crenshaw argued that the Statement failed to provide a “useful definition” and that the description of meme coins “are near universal hallmarks of crypto assets.”[13]
Among her specific criticisms, Commissioner Crenshaw argued that many meme coins foster expectations of profit and that funds do not necessarily need to be pooled to establish a common enterprise.[14] For example, promoters not only make money from selling a meme coin but “often also from retaining and holding a significant portion of the token supply as its value increases. The linked fortunes of purchasers and promoters – who will both make money as the coin value goes up – may itself satisfy Howey’s requirement for a ‘common enterprise.’ ”[15] Commissioner Crenshaw also expressed concerns about promoters’ ability to impact market demand and about fraudulent schemes and market manipulation.[16]
This does not mean that the Statement was wrong in recognizing that many meme coins with limited features could be treated as mere collectibles. Similarly, the Statement signals that the current SEC is not treating all meme coins as digital asset securities. But there is still a reasonable tension between the guidance issued in the Statement and the criticisms levied by Commission Crenshaw – namely that “Among the hundreds of self-proclaimed meme coins in the market, there is no doubt a continuum of offers and sales, some of which may be offers and sales of securities and some which may not.”[17]
Regulatory Relief, but No Laughing Matter
After several years of enforcement-heavy policies led by former Chair Gary Gensler, the change in administration has quickly brought renewed enthusiasm for the digital assets industry, driven by the new administration’s willingness to engage in dialogue with the industry and drop existing lawsuits. Even if the Staff Statement on Meme Coins leaves several regulatory questions unanswered, it is a well-intentioned starting point for dialogue that previously felt unwelcome. The criticisms and concerns raised by Commissioner Crenshaw are not totally at odds with the caveats in the Statement, either.
Ultimately, the safest course of action – which the Statement explicitly invites – is to contact the Division of Corporation Finance for interpretive advice and assistance before offering a digital asset if you’re unsure of whether the characteristics of a “meme coin” might implicate securities laws.[18] And if the meme economy evolves or blurs the line, the SEC has reserved the right to reassess – so staying informed is key in this fast-moving regulatory landscape.
[1] Dogecoin, Wikipedia, available at https://en.wikipedia.org/wiki/Dogecoin.
[2] Doge, Wikipedia, available at https://en.wikipedia.org/wiki/Doge_(meme).
[3] Statement, Staff Statement on Meme Coins, SEC Division of Corporation Finance (Feb. 27, 2025), available at https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id. (citing Section 2(a)(1) of the Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange Act of 1934).
[9] Id.
[10] Id.
[11] Id. (citing United Housing Found., Inc. v. Forman, 421 U.S. 837, 852 (1975)).
[12] Id.
[13] Dissenting Statement, Response to Staff Statement on Meme Coins: What Does it Meme?, Commissioner Carolina A. Crenshaw, SEC (Feb. 27, 2025), available at https://www.sec.gov/newsroom/speeches-statements/crenshaw-response-staff-statement-meme-coins-022725.
[14] Id. & n.7 (quoting SEC v. Eurobond Exch., 13 F.3d 1334, 1339 (9th Cir. 1994)).
[15] Id.
[16] Id.
[17] Id.
[18] Staff Statement on Meme Coins (citing Corporation Finance Request Form for Interpretive Advice or Other Assistance, available at https://www.sec.gov/forms/corp_fin_interpretive).
