In recent years, memecoin have transitioned from simple internet jokes to genuine financial phenomena. With passionate communities and sudden price pumps, these cryptocurrencies have attracted thousands of investors. However, the lack of clear regulation has always left doubts about their legality.

Now, the SEC (Securities and Exchange Commission) has finally taken a stance: memecoins are not securities and do not fall under financial securities regulation. But what does this mean for investors? Is it truly an opportunity or just a green light for scams and speculation? Let’s find out together.

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What are memecoin?

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The memecoin are cryptocurrencies inspired by memes, viral phenomena, and internet culture. Unlike Bitcoin or Ethereum, they were not created with the aim of offering advanced technologies or concrete solutions. Their strength lies in the hype generated by the community and in the strong market speculation.

Some famous examples:

• Dogecoin (DOGE) – Created as a joke in 2013, it has become one of the most traded cryptocurrencies thanks to the support of Elon Musk.

• Shiba Inu (SHIB) – Launched as a “Dogecoin killer,” it has attracted a huge community and developed an entire DeFi ecosystem.

• Pepe (PEPE) – Based on a historic meme, it has experienced incredible pumps, with gains of +1000% in just a few weeks.

Memecoins work like tickets to an exclusive event: their value is not determined by technological innovation, but by public demand and speculation.

The position of the SEC: are memecoins deregulated?

The SEC has determined that memecoin do not fall under the definition of security, therefore they are not subject to the strict financial securities regulations. This decision is based on two fundamental criteria:

1. Memecoins do not represent an investment in an enterprise

• Those who purchase a memecoin are not financing a structured project, as is the case with the shares of a company.

2. There is no “reasonable expectation of profit” linked to the efforts of third parties

• The price of memecoins is driven exclusively by speculation, without a team working to ensure future profits.

The Test di Howey:

The SEC uses the Howey Test to determine if an asset is a security. Since memecoins do not meet the criteria (lack of a company behind them and absence of profits derived from third-party management), they do not fall under U.S. financial regulation.

What does it mean for the memecoin market?

1️⃣ Boom of New Memecoin

Now that the SEC has clarified their position, it is likely that we will see an explosion of new memecoins. Without the risk of being classified as securities, many developers will feel free to launch new projects.

2️⃣ Less Protections for Investors

While on one hand this decision aids market growth, on the other hand investors will not have legal protections in case of fraud or market manipulation. The main risks include:

• Pump-and-dump – Schemes in which the price is artificially inflated only to crash, leaving investors with heavy losses.

• No transparency – The creators of memecoin are not required to provide details on tokenomics, team, or roadmap.

• Risk of rug pull – Projects that raise funds and then disappear into thin air, as happened with Squid Game Token.

Real case:

In 2021, the Squid Game Token attracted thousands of investors by promising cryptocurrency prizes. After a rapid pump, the developers fled with millions of dollars, leaving the price at zero.

3️⃣ Possible Alternative Regulations

Even though the SEC has excluded memecoins from securities, other authorities might intervene. Possible future developments:

• Stricter anti-fraud laws against crypto scams.

• Greater control over exchanges to avoid market manipulations.

• Advertising regulation, to prevent memecoins from being promoted with false promises of profit.

SEC: the future of memecoin regulation

Updated data:

According to CoinGecko, in 2024 the trading volume of memecoins increased by +50% compared to the previous year. With the absence of regulation, it is likely that the trend will continue to grow.

What could happen in the coming months?

✔ Increase of memecoins in the market – Without regulatory constraints, new projects will emerge every day.

✔ Greater volatility – Speculation will be even stronger, with extreme fluctuations.

✔ Possible new regulatory interventions – Other agencies could introduce rules to protect investors.

Conclusion: opportunity or risk for investors?

The decision of the SEC is a victory for the crypto market, because it removes an important regulatory barrier. However, the absence of regulation increases the risk of scams and manipulations.

If you want to invest in memecoin, here are some golden rules:

Do research on the project – Avoid tokens with anonymous teams or without a clear roadmap.

Analyze the tokenomics – Check how much of the supply is held by the creators.

Prepare an exit strategy – Do not invest everything in a single asset and establish when to sell.

And you, what do you think? Are memecoins an opportunity or a risk? Join the discussion on our social channels! 🚀