March 1, 2025
Meme Coins Are For Entertainment
The SEC stated that meme coins typically “have limited or no functionality” and are not subject to securities laws. The agency also cautioned that meme coin holders aren’t protected by federal securities laws.
Source: The Kobeissi Letter
The SEC further clarified that meme coins are not considered securities because they don’t generate yields or provide rights to business assets or future profits. Instead, they are bought for entertainment, social interaction, or speculative purposes.
Pump.fun Falters
The guidance arrives amid increased scrutiny of the meme coin market following incidents like the LIBRA scandal and the security breach at Pump.fun, which led to the promotion of several fraudulent tokens.
As a result of the breach, Pump.fun has seen a significant revenue decline, falling from $15.38 million in January to just over $1 million. The platform’s daily token launches have dropped sharply, with only 0.88% of tokens created being successfully launched.
