Memecoins aren't just jokes anymore — they are billion-dollar scandals. Nearly every celebrity-backed memecoin follows the same trend: skyrocketing prices and then a significant collapse, leaving investors burned. Still, the staff of the US Securities and Exchange Commission (SEC) said memecoins are not 'securities.'

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The SEC's clarity comes after the rapid rise of such cryptos following Trump's election win last year and their recent crash. As the 3.3 trillion-dollar crypto market inches toward mainstream acceptance, the memecoin frenzy has threatened the sector's credibility. The SEC staff's directive says invest in memecoins at your own risk.

The guidance shows there won't be any regulatory oversight in memecoins. The regulator's division of corporation finance staff noted that meme coins "typically have limited or no use or functionality" and are "more akin to collectibles."

US SEC lets memecoins slide

The SEC staff noted, "It is the division's view that transactions in the types of memecoins...do not involve the offer and sale of securities under the federal securities laws." The statement added, "Persons who participate in the offer and sale of memecoins do not need to register their transactions with the commission. ... Accordingly, neither meme coin purchasers nor holders are protected by the federal securities laws."

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While the SEC's stance lines up with the new administration's pro-crypto stance, the digital industry is being threatened by the rise and crash of memecoins. The latest memecoin scandal has rocked Argentina and the crypto world. Libra, a memecoin promoted by Argentine President Javier Milei, soared to 4.5 billion dollars in market value within an hour of its launch. But the hype was short-lived. Within hours, the token crashed by 80 per cent, leaving investors reeling. This is not an isolated event.

Memecoins — once a quirky blend of internet culture and finance — have become high-risk speculative assets. While some early investors profit, the majority of investors suffer heavy losses. Industry experts argue that these speculative tokens overshadow serious blockchain projects.

The launch of the trump memecoin — followed by a similar move from Melania Trump — has triggered scrutiny. Crypto lobbyists fear these schemes could derail long-awaited regulatory clarity for digital assets,

just as bitcoin and Ethereum ETFs are gaining mainstream traction on Wall Street. The SEC's guidance will accentuate the problems further as pump-and-dump schemes attract more retail investors. Only the insiders cash out, leaving many investors with massive losses.

(With input from the agencies)