In its most recent statement, the Securities and Exchange Commission, which plays a vital role in regulating cryptocurrency, explained that most meme coins aren’t securities under U.S. federal law. Hence, individuals who trade digital items aren’t required to file a registration statement. Meme coins’ functionality is either constrained or entirely lacking and they bear resemblance to collectibles, according to the SEC’s Division of Corporation Finance. According to the SEC, meme coins do not meet the criteria for investment contracts under federal law. The regulatory framework doesn’t provide traders with sufficient protection, but that doesn’t mean fraudsters can attack them without repercussions.
When Donald Trump launched his own $TRUMP meme coin, he ignited a burst of trading activity. The crypto market rose across the board in the hours since Trump’s announcement, with Shiba Inu among the top-performing assets. The price of the ERC-20 token is closely tied to media hype, so it thrives when confidence is high and struggles when liquidity is low. Some investors speculate on meme coins during periods of high media attention, though timing the market carries significant risks. Keep up with the SHIB news today to understand current market trends – conduct thorough research before engaging with meme coins, given their speculative nature.
Known As Crypto Mom, Peirce Has Recently Criticized The Patchwork Of The SEC
Though they’ve become an essential pillar of decentralized finance (DeFi), meme coins like Shiba Inu can’t be accounted for as financial instruments because they don’t guarantee a yield or grant rights to future income. Designating them as securities would have had a massive impact on the crypto market: exchanges wishing to list them would have needed to register as securities broker-dealers with the SEC. Centralized exchanges would have experienced problems, as well as decentralized trading platforms. The new administration is openly positive towards cryptocurrency, and though the SEC won’t regulate meme coins, it will still examine the economic realities of the transactions they’re involved in.
SEC Commissioner Hester M. Peirce, who has been active on the legislative and regulatory sides of the table for more than 20 years, highlighted critical flaws in the new directive. Peirce argues that the agency’s approach to regulating meme coins is too comprehensive and could impede innovation in the industry. To be more precise, the interpretative guidance doesn’t provide clear criteria for establishing when a meme coin could be considered a security, leaving the crypto industry in a state of uncertainty. Even if traders are responsible for doing their own diligence on the meme coins they acquire, the SEC can intervene and initiate administrative enforcement proceedings if tokens are used to evade securities laws.
Given The Speculative Nature Of Meme Coins, They Tend To Exhibit Higher Volatility
The SEC’s most recent statement on meme coins could encourage investors to speculate on the price movements of these novelty digital items. In a strong bull market, traders could see higher returns if they take risks; by contrast, in a bear market, they could experience extensive losses. Dollar-cost averaging and HODLing can be used to reduce or eliminate unwanted consequences. Your implementation plan should include the following steps:
- Dollar-cost averaging (DCA): Invest your money in equal portions at regular intervals. With time, you can reduce the impact of the meme coin market volatility on the overall purchase. The aim is to accumulate digital assets as time passes at an average cost. By allocating a fixed amount weekly, monthly, or quarterly, you can lower the average cost per unit.
- HODLing: HODL stands for hold on for dear life. Buy meme coins and hold onto them for an unlimited period of time. Don’t sell your cherished possessions when the market is down or becomes volatile. Buy more as opportunities emerge, even if it feels risky – and you definitely shouldn’t panic sell.
Most Meme Coins Launched In The Past 12 Months Have Been Released On Solana
Though meme coins have been around for more than a decade, it’s only recently that they have gone mainstream. Celebrities, social media influencers, and even high-profile politicians have launched their own cryptocurrencies, and the collective market cap is just above $50 billion. One of the most widely-known meme coins is Shiba Inu, which evolved from a joke to a money-making opportunity. Launched as a rival of Dogecoin or the “Dogecoin killer”, SHIB’s ecosystem comprises developers, investors, businesses, and users. Developers create applications and services users leverage to interact with the Shiba Inu network, whereas investors provide capital for blockchain businesses.
Among the countless blockchains available for meme coin development, Solana has emerged as one of the best platforms. Solana can process thousands of transactions per second and makes available an open-source infrastructure that attracts crypto enthusiasts, as they can review the code and contribute to the project. Thousands of Solana meme coins exist, capitalizing on the developer-friendly toolkit, low fees, and high throughput. The SHIB ecosystem wants to enhance cross-chain interoperability as Shiba Inu holders demand a Solana bridge. Developing such a bridge would enable Solana-based tokens and apps to interact with those on Shibarium, the Layer-2 solution for the Shiba Inu ecosystem.
So, What Comes Next For Meme Coins? We’ll Have To Wait And See
In an effort to bring clarity to the digital asset space, the SEC announced that the vast majority of meme coins fall outside its jurisdiction, lacking any real business purpose or investment promise. It’s a remarkable contrast to how the agency considered crypto tokens under its former chairman, Gary Gensler, who repeatedly asked for them to be treated as securities and required crypto service providers to file a registration form. Attention must be paid to the fact that a staff opinion doesn’t represent an official policy, but it’s a sign that we’re moving in the right direction.
All in all, the SEC’s ruling doesn’t solve the issue at hand, and investing in meme coins carries multiple risks. Established tokens like Shiba Inu have a more stable price but less potential for growth since their market value is already quite high. It’s important to be cautious because trading isn’t something you dabble in for fun. If you don’t understand an investment, don’t buy into it.
