SEC Declares Memecoins Are Not Subject to Oversight

The S.E.C.’s policy statement did not refer to Mr. Trump’s memecoin or any other specific digital novelty item. But the commission clearly acknowledged the risk to investors who put money into such products, even as it said it would not regulate them. “Although the offer and sale of memecoins may not be subject to the federal securities laws, fraudulent conduct related to the offer and sale of memecoins may be subject to enforcement action or prosecution by other federal or state agencies,” said the statement, from the S.E.C.’s division of corporation finance. In reaching its conclusion, the S.E.C. employed a nearly century-old Supreme Court decision to determine that a memecoin should not be considered an investment contract and therefore subject to regulatory oversight. Under Gary Gensler, who served as S.E.C. chair under President Joseph R. Biden Jr., the regulator had used that same Supreme Court case to argue that most digital assets are securities and subject to regulation. T ... Read full article.