SEC Declares Memecoins are Not Securities, are "Akin to Collectibles"

Staff Statement on Meme Coins

As part of an effort to provide greater clarity on the application of the federal securities laws to crypto assets, the Division of Corporation Finance is providing its views on “meme coins.” A “meme coin” is 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. Although individual meme coins may have unique features, meme coins typically share certain characteristics. Meme coins typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation. In this regard, meme coins are akin to collectibles. Meme coins also typically have limited or no use or functionality. Given the speculative nature of meme coins, they tend to experience significant market price volatility, and often are accompanied by statements regarding their risks and lack of utility, other than for entertainment or other non-functional purposes.

It is the Division’s view that transactions in the types of meme coins described in this statement, do not involve the offer and sale of securities under the federal securities laws. As such, persons who participate in the offer and sale of meme coins do not need to register their transactions with the Commission under the Securities Act of 1933 (“Securities Act”) or fall within one of the Securities Act’s exemptions from registration. Accordingly, neither meme coin purchasers nor holders are protected by the federal securities laws.

SEC Plans to Drop Enforcement Suit Against ConsenSys’ MetaMask, CEO Joe Lubin Says

The U.S. Securities and Exchange Commission (SEC) is dropping yet another case against an American crypto company, as the regulator continues its strategic retreat from the so-called “regulation by enforcement” approach to crypto regulation it took under the leadership of former Chairman Gary Gensler.

Joe Lubin, CEO of Brooklyn-based crypto software company ConsenSys, said in a Thursday X post that the SEC has agreed to drop its ongoing securities enforcement case against ConsenSys’s MetaMask wallet tool. Like the agency’s decision to drop its case against crypto exchange Coinbase, which was announced last week, the move must first be approved by the agency’s commissioners.

Court Finds in Favor of Two Remaining Defendants in Fraud Scheme

The Securities and Exchange Commission announced today that an enforcement action filed in June 2022 against six defendants has concluded with a judgment entered on February 6, 2025, in favor of the remaining two defendants, Roger Bendelac and Thomas Capellini of New York, after a four-day bench trial conducted in October 2024 in the U.S. District Court for the District of Massachusetts. The SEC’s claims against the other four defendants, Trends Investments Inc., Clinton Greyling, Leslie Greyling, and Brandon Rossetti, have been resolved.

Rebranding of SEC Cyber Unit Reflects Shift in Enforcement Priorities

These priorities reflect a return to a focus on clearly fraudulent conduct and violations that impact retail investors, which typically are SEC enforcement priorities during Republican administrations. These newly announced bullets describing the CETU’s priorities are incredibly consistent with the priorities announced when the Cyber specialized enforcement unit was first created under the most recent previous Republican administration in 2017. 13They are also consistent with many of the public statements of former Commissioner and now SEC Chair nominee Paul Atkins, who has commented in the past that the SEC should not be “devising new legal theories that reach behavior that does not clearly violate an existing rule” or playing “gotcha” with its enforcement powers, but rather should pursue enforcement when “fraud and deception have taken place.”

As a result, while public company disclosures and regulated entities’ compliance with cybersecurity rules will remain areas of focus, we expect that cases in those areas will focus on clearcut violations where there is evidence of scienter, rather than instances where the SEC is second-guessing language choices or materiality judgments with the benefit of hindsight.

SEC Reportedly Plans to Cut Regional Directors as Cost-Saving Measure

The SEC’s regional offices examine regulated entities in their region. They often identify and lead investigations and enforcement actions, with guidance from the regional directors. If regional directors are eliminated, it will undoubtedly impact the SEC’s investigation and enforcement efforts. Companies will likely see a reprieve on investigations and enforcement actions, at least in the short term. Cutting the regional directors’ role will likely stall decisions on whether to bring enforcement actions and slow the pace at which they are filed. It will also likely have an impact on employee morale.

It remains to be seen whether the reported plans to eliminate the regional directors’ roles will come to fruition, whether the SEC might include plans to close and/or consolidate any additional regional offices after closing its Salt Lake Regional Office in June 2024, or what other cost-saving measures the SEC could take.