Recently, a regulatory body acknowledged that meme coins are not classified as securities, and consequently, they fall outside the agency’s regulatory scope. Despite this clarification, many prominent meme coins witnessed a decline of over 10 percent within a 24-hour period, reflecting trends across the broader cryptocurrency market.
Meme coins are defined as crypto assets that draw inspiration from internet memes, characters, trending events, and other pop culture phenomena. They are intended to capture the interest of enthusiastic online communities that engage in buying and trading these coins. Their primary appeal lies in entertainment, social interaction, and cultural significance, with their worth largely driven by market demand and speculation. In this context, these coins are similar to collectibles.
It was further stated that meme coins generally possess minimal to no utility or intended function, which means they do not satisfy the criteria for being classified as securities under established regulations.
This announcement coincided with the conclusion of an investigation into a cryptocurrency exchange and the dropping of legal actions against another, suggesting a potential shift in the regulatory landscape.
Despite the regulatory acknowledgment concerning their classification, meme coins continued to experience declines in value recently. The leading meme coin, Dogecoin, with a market capitalization surpassing $27.5 billion, reported a loss of approximately 10 percent in just 24 hours and nearly 28 percent over the past week. Other notable meme coins like Shiba Inu and Pepe also followed suit, registering losses of 15 percent and over 23 percent respectively during the same period.
Additionally, the TRUMP coin, associated with a public figure, ranked among the most adversely affected meme coins, dropping 14.3 percent in a single day and 32.2 percent in seven days. Overall, the meme coin market has seen a decrease of about 8.6 percent as Bitcoin dipped below the $80,000 threshold, erasing significant gains achieved since a major political event. Ethereum and XRP, two other key cryptocurrencies, also saw declines exceeding 20 percent within the past week.
It’s worth noting that meme coins had previously surged following a major political victory, which had led to a marked increase in the value of Dogecoin, particularly due to endorsements from influential figures. However, interest has since waned among investors.
Overall, the creation and trading of meme coins do not typically involve financial investments in an enterprise, nor do they stem from expectations of profit derived from the management efforts of others. This perspective highlights the speculative nature surrounding these assets, emphasizing their popularity more as cultural phenomena rather than genuine investment opportunities.