There are more in the recent memecoras guide of the S than attention. On February 27, the staff of the CORNERATIVE FINANCE DIVISION of the SEC issued a guide that explains that Memecoins, which the SEC described as digital assets “inspired by Internet memes, characters, current events or trends for which the promoter seeks to attract an enthusiastic online community”, they are generally not sold as values.
This is consistent with the change of the SEC of the efforts under former President Gary Gensler to claim regulatory power over practically the entire digital asset industry, and could have implications for the industry that go far beyond Memecoins.
The attempts of the SEC of regular digital assets during the Biden administration depended largely on the so -called “Howey Test” of the Supreme Court to determine whether a transaction involves an “investment contract.” Howey requires an investment of money in a common company, with an expectation of profits of the efforts of others.
In the SEC compliance actions against digital assets exchanges, the defendants argued that the reas of the secondary market of digital assets lack the “investment of money in a common company” because investors funds are not “grouped” by developers in a common fund and then use a business in which investors share the benefits. In the case of the SEC against Kraken, for example, the agency told a Federal Court that “grouping the income of resale” by a developer is No “Required under Howey.”
The new SEC guide confirms otherwise. He says that Memecoins buyers do not make investments in a common company because their funds “are not grouped to be deployed by promoters or other third parties to develop the currency or a related company.” The guide also explains that Memecoin buyers do not expect profits derived from the efforts of others, another Howey’s requirement. Rather, Memecoins’ value comes from “speculative trade and the collective feeling of the market, as a collectible.”
The memecoin guide of the SEC is obviously consistent for the sale and promotion of Memecoins, which are subject to recent private classes presented by individual plaintiffs. But it has broader implications for all transactions in the secondary market in digital assets, even in exchanges. In secondary market transactions in exchanges, buyers’ funds are also “not grouped to be deployed by promoters or other third parties to develop the currency or a related company.” Therefore, the dry now seems to recognize that under an adequate application of the Howey Proof, these transactions are beyond the reach of the agency, as the defendants have constantly argued in the previous application cases of the SEC.
This doctrinal reversal can be part of the impetus behind the recent decisions of the SEC of voluntarily dismissing several cases that involve secondary market transactions and to maintain more procedures in others.
Undoubtedly, the new SEC guide includes statements that “represents the opinions of [agency] The staff “, not necessarily the SEC itself, and that the statement” has no legal strength or effect. “The SEC also tried to restrict the guide of” the offer and sale of memes coins “in the specific circumstances described in other parts of the statement.
The agency could try to use these schedules to get out of the guide at some point in the future. But the constitutional principles of due process and fair notification can limit the capacity of the agency to impose retroactive responsibility based on any Flip-Flop future. In addition, although the SEC guide is not binding for the courts, the change of position of the SEC in the group will make it difficult for private plaintiffs to argue that most digital assets are sold as values.
The SEC guide on Memecoins is consistent with the other recent steps of the agency to withdraw from the regulation approach for compliance that affected the industry under former President Gary Gensler. And the guide offers a clarity of welcome from the agency in an area where the previous approach of the agency had significantly clouded the waters. In summary, it is a significant step in the right direction for the law and cryptographic policy in the United States.
