The SEC has ruled that most meme coins are not securities, but a new congressional bill reportedly aims to crack down on political crypto tokens linked to public officials.
The U.S. Securities and Exchange Commission (SEC) has ruled that most meme coins are not securities, which could ease regulatory concerns for retail traders and developers alike – but that hasn’t stopped meme coins from plummeting as Bitcoin’s price slipped below $80,000.
The collective market capitalization of meme coins dropped by 6.2% for the day, according to CoinGecko data.
In its guidance issued Thursday, the SEC stated that meme coins do not need to be registered with the commission.
The agency determined that these tokens lack fundamental characteristics of securities, such as generating yield or granting rights to business assets or profits. Instead, the SEC likened meme coins to collectibles, emphasizing their limited functionality and utility.
However, the apex financial regulator also warned that any fraudulent tokens could still be subject to enforcement actions by other regulators.
SEC’s guidance came shortly after reports that the US Congress was set to consider legislation that would ban the issuance of meme coins like President Donald Trump’s Official Trump (TRUMP) token.
House Democrats are reportedly preparing to introduce the Modern Emoluments and Malfeasance Enforcement (MEME) Act, which would bar public officials from profiting off digital assets.
Speaking to ABC News, Representative Sam Liccardo of California said the bill seeks to prevent politicians from leveraging their office for financial gain.
The proposed legislation would prohibit public officials, relatives, and campaign entities from issuing, sponsoring, or endorsing any digital asset, security, or commodity.
Policy chatter comes amid a rise in new meme coin cryptocurrencies following Trump’s election.
The recent surge in political meme coins, dubbed ‘PolitiFi,’ has drawn speculation and controversy.
One of the highest-profile tokens, Official Trump, has lost nearly 10% in the past 24 hours and is now trading 84% below its all-time high of $73.43, reached on Jan. 19 ahead of Trump’s inauguration.
On Stocktwits, retail sentiment around the Official Trump token dipped lower into the ‘bearish’ territory.
The token hit an all-time low of $0.80 as Bitcoin slid below its 200-day simple moving average (SMA).
Amid ‘bearish’ sentiment on Stocktwits, retail chatter around Melania’s token remained ‘high,’ as some users expressed bewilderment at the token’s price drop.
Others suggested that the meme coin had run its course.
The cumulative market capitalization of political meme coins dropped 10.7% in the last 24 hours, reflecting a broader cooling of enthusiasm.
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