SEC Commissioner Caroline Crenshaw Dissents on Meme Coin Non-Security Ruling
SEC Commissioner Caroline Crenshaw has voiced opposition to the agency’s recent guidance that classifies meme coins as non-securities. In a statement on Feb. 27, Crenshaw argued that meme coins could meet the Howey test’s criteria, particularly in how investors rely on the managerial efforts of developers and promoters for potential profits. Her dissent comes in response to the SEC’s newly released guidance, which describes meme coins as speculative assets tied to online trends rather than investment contracts.
New SEC Stance Suggests Meme Coins Exist For Entertainment
The SEC’s new stance suggests that meme coins exist primarily for entertainment and social engagement, a perspective Crenshaw firmly disputes. “Today’s statement paints meme coins as cultural projects whose purpose is entertainment and social engagement. The reality is that meme coins, like any financial product, are issued to make money,” she said. The debate around meme coins has intensified following several high-profile scams and a controversial presidential memecoin launch. The issue has drawn the attention of lawmakers, particularly after former U.S. President Donald Trump’s involvement in a memecoin project. In response, Democratic Senator Elizabeth Warren and others have called for an investigation into potential ethics violations related to political token offerings. On Feb. 27, Representative Sam Liccardo of California announced that House Democrats are preparing legislation to ban presidential meme coins. The proposed Modern Emoluments and Malfeasance Enforcement (MEME) Act aims to prohibit U.S. lawmakers, as well as their spouses and dependents, from issuing, endorsing, or profiting from digital assets.
Meanwhile, legal experts are weighing in on how meme coins should be regulated. Former Commodity Futures Trading Commission (CFTC) attorney Elizabeth Davis suggested that if the CFTC is granted greater oversight of cryptocurrencies, meme coins could fall under its regulatory jurisdiction. Davis also predicted that clearer regulations on meme coins would emerge within the next year, bringing more clarity to the industry.
Trump Elects Pro-Crypto Paul Atkins as SEC Chair
As Cryptonews reported earlier, President-elect Donald Trump has selected Paul Atkins as SEC Chair. Atkins, who previously served under SEC chairs Richard Breeden and Arthur Levitt, is “crypto savvy” and has a “deep understanding of the inner workings of the agency.” Trump, who most recently launched his family’s crypto platform, World Liberty Financial, has regularly vowed to enact a crypto-friendly regulatory framework upon returning to the Oval Office. The shift comes as the SEC has been facing growing criticism due to its “regulation-by-enforcement” approach to the crypto industry. Critics argue that the SEC has failed to establish a clear regulatory framework for cryptocurrencies, opting instead to pursue legal action against key industry players. A coalition of seven U.S. states has come together to challenge the Securities and Exchange Commission’s (SEC) regulation of cryptocurrency. The states have filed an amicus brief, led by Iowa Attorney General Brenna Bird, arguing that the SEC’s attempt to regulate cryptocurrencies constitutes a “power grab” that would stifle innovation, harm the crypto industry, and exceed the agency’s authority.
