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Memecoins, Regulation, and the SEC’s Changing Strategy
Crypto Regulation | Feb 12, 2025
Image: Commissioner Hester Peirce interview (Bloomberg Crypto)
SEC’s New Crypto Task Force and What It Means for Memecoins and Digital Assets
Bloomberg Crypto interviewed Commissioner Hester Peirce, the head of the U.S. Securities and Exchange Commission's (SEC) new Crypto 2.0 Task Force to discuss the SECs approach towards regulation, memecoins and digital assets. Below we summarize the key takeaways for your review - watch the full video for more.
SEC is Shifting Away from Regulation by Enforcement
The focus is now on making crypto rules clearer and avoiding the heavy enforcement actions of the past. Peirce says that the new leadership at the SEC wants to set policies first and then enforce them, rather than using lawsuits as a way to define the rules.
“We have been using enforcement cases to set regulatory policy. We're trying to shift that. So we actually set policy and then we bring enforcement cases as needed.”
See: Trump Picks SEC Chair, Shakes Up Crypto and Oversight
One of the first goals of the task force is to determine which digital tokens fall under SEC regulation. The SEC is figuring out which assets it can regulate, which might belong under the Commodity Futures Trading Commission (CFTC), and which are outside any current laws. This new approach is meant to provide clarity for businesses and investors.
Memecoins Likely Outside SEC’s Jurisdiction
Peirce admitted that many memecoins may not fall under the SEC’s jurisdiction. She said that each token would be reviewed individually but generally most memecoins do not meet the legal definition of securities. This includes the recently launched $TRUMP memecoin that shot up to $27 billion in market value or the former first lady's $MELANIA memecoin, too (NB: now whether or not political figures should be involved or memecoins or not is another thing). This means the SEC may not have authority over them unless new laws are passed. This means that memecoins could remain largely unregulated unless lawmakers step in.
“Facts and circumstances matter. We always have to look at the facts and circumstances, but many of the meme coins that are out there probably do not have a home in the SEC under our current set of regulations.”
This is a big pivot from the previous SEC leadership who often argued that most crypto tokens were unregistered securities and took significant legal actions against major exchanges and token traders like Coinbase, Uniswap, or Robinhood to name a few.
See: Regulatory Clarity for Crypto: Sacks Unveils U.S. Strategy
So what's the impact? Many believe that it's a good thing, arguing that memecoins are more like collectible items rather than investments. David Sacks, the White House's chosen crypto czar, said “Memecoins belong in a category of digital collectibles, not securities,” suggesting that they may not need (heavy) regulation. On the flipside, if memecoins remain largely unregulated, there will be more memecoin scams/rugpulls, increased volatility (wild price swings) and no safeguards for investors against manipulation.
Congress and the Future of Crypto Regulation
As the SEC adjusts its stance on crypto, Congress is also working on new laws that could define how digital tokens are classified. Lawmakers are debating whether certain tokens should be treated as securities, commodities, or something else entirely. Peirce has emphasized that the SEC’s job is to identify gaps in existing regulations but ultimately, it'll be up to Congress to decide how these assets should be regulated.
“And then it's up to Congress to fill that in. And of course, Congress is working in parallel. They're working on legislative efforts to provide more clarity.”
See: SEC Launches Crypto 2.0 Task Force Led by ‘Crypto Mom’
This suggests that any major changes to crypto regulation will likely come from lawmakers, not the SEC.
Key Takeaways
- The SEC is changing from relying on lawsuits to regulate crypto and is now focusing on creating clear rules first.
- Since many memecoins do not fit the SEC’s definition of securities, they might not be regulated unless Congress introduces new laws.
- People investing in memecoins could experience extreme price swings, scams, and little to no legal protection.
- Lawmakers are drafting new regulations to determine whether different cryptocurrencies should be treated as securities or commodities, which will shape the future of the industry.
Outlook
The SEC is focusing on policy clarity before enforcement, largely making it easier for businesses and investors to operate in crypto markets without the fear of sudden legal actions. Memecoins remain in a gray area but likely outside the jurisdiction of the SEC. Without clear regulations, they could thrive as speculative assets or face scrutiny if lawmakers introduce new rules.
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