Author: Jesse Coghlan, CoinTelegraph; compiled by: Deng Tong, Golden Finance

The U.S. Securities and Exchange Commission said it does not consider memecoin to be a securities, but warned that any fraudulent tokens could still be subject to enforcement actions by other regulators.

The institution's corporate finance department said in a statement on February 27 that memecoin "does not involve securities issuance and sales under the federal securities laws" and is "similar to collectibles."

“So, those involved in the issuance and sale of memecoin do not need to register their transactions with the committee,” the SEC said.

It added that buyers and holders of memecoin will not be protected by U.S. securities laws, but said that memecoin’s fraudulent issuance and sale “may be subject to enforcement actions or prosecution by other federal or state agencies.”

SEC added that it shares its views “as part of an effort to make the federal securities laws clearer in the application of crypto assets.”

U.S. President Donald Trump has taken action to cut the SEC’s regulation of the cryptocurrency sector in hopes to deliver on one of his campaign promises. The agency formed a cryptocurrency task force last month to create a framework for digital assets.

Trump and First Lady Melania Trump himself launched memecoin a few days before entering the White House on January 20, which has sparked criticism from many cryptocurrency commentators and some Trump supporters.

Donald Trump’s memecoin Official Trump (TRUMP) fell nearly 83% from his peak, while Melania Trump’s token, Melania Meme (MELANIA), fell 93.5% from his peak, according to CoinGecko.

Trust-align: center;">Trust's daily trading price reached a peak of $73.43 before Trump took office, but now it trades at about $12.66. Source: CoinGecko

SEC's statement comes after ABC News reported that U.S. House Democrats will introduce a bill that prohibits public officials, including the president, from issuing, sponsoring, or endorsing any securities, commodities or digital assets, including memecoin.

SEC stated in its statement that memecoin is “usually limited in purpose or has no use or functionality” and “often experiences significant market price fluctuations.”

It added that memecoin does not meet “any common financial instruments explicitly enumerated in the definition of ‘securities’”—such as stocks or bonds—because theyThe right to generate no income or “future income, profit or business assets”.

SEC stated that memecoin does not meet the definition of “investment contract” in the securities definition in the Ouvian test – investing in funds from a common enterprise (such as a business) where investors expect to profit from the efforts of others.

“The issuance and sale of memecoin does not involve investment in the enterprise, nor does it aim to reasonably expect to make profits from the entrepreneurial or management efforts of others,” the agency said.

"In other words, memecoin itself is not a securities."

SEC added that its statement does not apply to memecoin that is inconsistent with its description, nor does it apply to any product labeled with a memecoin that attempts to evade securities laws "by disguising the product that originally constitutes a security."

"The department will evaluate the economic reality of a particular transaction," it said.

SEC Commissioner and head of the agency’s crypto task force, Hester Peirce, said earlier this month that many memecoins “may not find a foothold in the SEC under our current regulations.”