Commissioner Caroline Crenshaw ripped into the SEC’s new meme coin guidance, calling it dangerously incomplete and legally unsupported. In a blistering dissent, she warned the agency’s position contradicts decades of established legal precedent and fundamentally creates a roadmap for bad actors to evade securities laws.
The guidance suggests meme coins generally aren’t securities, but Crenshaw isn’t buying it. She argued these tokens often satisfy the Howey test criteria—the Supreme Court standard used to identify investment contracts. Promoters typically retain massive token supplies, implement “burns” to boost prices, and promise exchange listings. Sound like a security yet?
“Cultural projects,” they call them. Yeah, right. Crenshaw highlighted how meme coin issuers primarily aim to generate profits, creating a common enterprise where purchaser fortunes are tied directly to promoter actions. Not exactly a Renaissance art collective.
The crypto world just got handed a get-out-of-regulation-free card. Slap a dog face on your token, call it a meme, and poof—federal securities laws apparently don’t apply! This despite the fact these coins are notoriously volatile and speculative. Recent examples like Dogecoin and SHIB have demonstrated extreme price volatility, with Dogecoin reaching a peak of $0.7376 in 2021 before crashing.
Crenshaw’s concerns extend beyond mere definitional issues. The guidance offers no clear parameters for what actually constitutes a meme coin, raising more questions than answers. It’s like defining a sandwich as “bread with stuff” and calling it a day.
Meanwhile, investor protections go out the window. No Securities Act registration requirements. No disclosure mandates. Just a vague “buyer beware” attitude from the SEC.
The dissent comes amid a broader shift in the SEC’s approach to crypto regulation, potentially affecting ongoing cases and future oversight decisions. Critics worry this creates a troubling precedent for applying the Howey test to digital assets.
Bottom line? Crenshaw thinks the SEC just handed scammers a playbook. Add some emojis, create some memes, and regulatory scrutiny magically disappears. The February 27, 2025 statement from the Division of Corporation Finance claimed meme coins are merely speculative collectibles rather than securities. Investors beware.
