Memecoins Not Under SEC’s Watch, Says Commissioner Hester Peirce

Key Takeaways

• SEC commissioner says memecoins don’t fall under its jurisdiction.
• Memecoins have become the talk of the town this bull season as hundreds of new projects get launched every hour.
• Market pundits believe an unchecked meme market is a net negative for the industry.

The Securities and Exchange Commission (SEC) commissioner Hester Peirce said that many memecoins currently being launched or circulating in the market don’t fall under the purview of the securities agency.

Commissioner Peirce is the head of the newly created crypto task force assigned to develop clear crypto regulations, especially around security and commodity confusion.

If Not SEC, Then Who? The Trump Memecoin Dilema

SEC commissioner Peirce, in an interview , said the current regulatory rulebook doesn’t put the securities agency in charge of the memecoins. She added that Congress and the Commodity and Futures Trading Commission (CFTC) could address the ongoing memecoin frenzy.

“Many of the memecoins out there probably don’t have a home in the SEC under our current set of regulations. If Congress wants to address, they can do that; maybe something that the CFTC wants to address, but many of those, I think, probably are not under our jurisdiction.”

Peirce’s comments came in response to whether the president and first lady launching a memecoin makes her job difficult.

Peirce, a vocal advocate for clear crypto regulations in the Biden administration, is now among the lead policymakers deciding the fate of the crypto market and regulations.

The SEC is in charge of the security market. Under the previous Gensler-led agency, memecoins qualified as security based on the Howey Test, as traders primarily invest in meme tokens expecting to make big profits. Many regulatory analysts have compared the memecoin frenzy to gambling as well. 

The Changing Definition of Security Under Trump

Under the Biden administration, Bitcoin was the only crypto asset that undoubtedly qualified as a commodity. However, with the approval of spot Ethereum ETF, ETH also qualified as a commodity in the agency’s eyes. However, under the Trump administration, the definition of crypto security might change drastically.

This is evident from the surge in crypto ETF filings for numerous crypto assets, such as XRP, Solana, Dogecoin, HBAR, etc. There are several spot ETF filings for memecoins, including the Trump official memecoin.

Peirce’s statement was declared bullish by many memecoin frantics. However, others warned that SEC not taking up memecoins might not be suitable for the crypto industry in the long run.

Memecoins are a net negative for the industry in the long run as it not only promotes gambling among novice and new traders, it also sucks out liquidity from the market, and often, traders lose their hard-earned money chasing the next 100X memecoin compared to those who make a profit.