Meme coins such as Dogecoin and Shiba Inu are officially not securities, but collectibles, according to the American SEC. This decision gives developers more freedom, but also entails risks for investors.
Meme coins: from internet joke to serious business
Imagine you have a rare Pokémon card. Nobody uses it to pay for things, but collectors love it and its value can fluctuate enormously. That is roughly how the American Securities and Exchange Commission (SEC) now views meme coins.
According to the SEC, these digital tokens, such as Dogecoin and Shiba Inu, are not financial securities like shares, but rather collectibles. This means that they are not subject to strict securities laws and developers need not worry as much about complex rules. That sounds like good news, right? But as with any hype, there is also a downside.
Why are meme coins not securities?
To determine whether something is a security, the SEC uses the so-called Howey test. In short, if an investment promises profits based on the work of others, then it falls under securities legislation. Meme coins lack this element. They do not yield profits from business activities and do not give investors control over an organization.
Instead, they derive their value from community hype and internet culture. Just as a Banksy painting becomes valuable because people want it, the same goes for meme coins. But therein lies the risk: their value can collapse as quickly as it rises, purely based on sentiment.
WOW.
The SEC just said that meme coins are generally NOT considered securities under US federal law.
They also said that meme coins have “limited or no use” and do not need to be registered with the SEC.
This is a MASSIVE statement by the SEC. pic.twitter.com/7KpB2c2481
— The Kobeissi Letter (@KobeissiLetter) February 27, 2025
What does this mean for investors and developers?
This opens new doors for developers. They can start projects without SEC restrictions and build innovative applications around meme coins. This can lead to creative ecosystems, such as games and digital collectibles. But investors should beware: without regulation, there is less protection against scammers and market manipulation.
The SEC warns that fraud can still be punished, even though meme coins are not securities. In short, while the door is open for more experimentation and growth, it remains a playing field where you must remain alert.
What does this mean for the crypto world?
The recognition of meme coins as collectibles gives the crypto market more freedom, but also brings with it risks. Developers can experiment without strict regulations, but investors must be careful. As with any hype, it is wise not to blindly follow the crowd, but to remain critical and understand what you are getting into.
