SEC's Peirce suggests memecoins may not fall under agency jurisdiction
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce indicated that many memecoins currently on the market might not be under the agency's regulatory purview.
In a Bloomberg interview, Peirce, who is spearheading the SEC's crypto task force, stated that while the introduction of memecoins is on the rise, the specific facts and circumstances of each coin are critical in determining their regulatory status.
However, she suggested that "many of the memecoins that are out there probably do not have a home in the SEC under our current set of regulations."
Peirce highlighted that the responsibility to address the memecoin issue could fall either to the U.S. Congress or the Commodity Futures Trading Commission. Last month, Peirce was appointed to lead the SEC’s crypto task force, which has been focusing on distinguishing which crypto tokens should be considered “non-securities,” aiming to resolve the confusion surrounding the classification of cryptocurrencies as securities.
Her recent remarks are in contrast to the views of the SEC during the tenure of former chair Gary Gensler, who believed that the majority of cryptocurrencies are indeed securities. Under Gensler, the SEC initiated enforcement actions against several major crypto entities, including Binance, Coinbase (NASDAQ: COIN ), and Kraken, which led to complaints about a lack of regulatory clarity.
Peirce also criticized the SEC's approach to innovation within the crypto space, expressing frustration with the obstacles faced by those attempting to engage with the agency. She called for a policy that encourages innovation and experimentation in the field.
Memecoins have been part of the cryptocurrency landscape for over a decade, with Dogecoin being one of the most well-known examples. The popularity of memecoins surged in the past year, largely due to platforms like the Solana memecoin launchpad pump.fun, which contributed to a 500% increase in the market capitalization of meme tokens, reaching an estimated $120 billion in 2024. This surge in interest even led former U.S. President Donald Trump to introduce his own meme token.
Despite their popularity, memecoins have been criticized for their lack of regulation and high volatility. The market has also been plagued by fraudulent activities and pump-and-dump schemes, resulting in financial losses for investors.
Recently, a memecoin investor initiated a class action lawsuit against pump.fun, represented by the law firms Wolf Popper and Burwick, claiming that the platform's operations were akin to a Ponzi scheme and that it had violated securities laws.
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