Memecoins like US President Donald Trump’s Official Trump (TRUMP) token do not fall under the jurisdiction of the Securities and Exchange Commission, according to Commissioner Hester Peirce.
Amid reports that investors have lost about $2 billion on Trump’s memecoin in a matter of weeks, Peirce said most memecoins are not subject to SEC oversight.
In a Feb. 11 interview with Bloomberg, Peirce addressed a question on whether memecoins like TRUMP and First Lady Melania Trump’s Official Melania Meme (MELANIA) have increased work for the SEC.
“Many of the memecoins that are out there probably do not have a home in the SEC under our current set of regulations,” Peirce said, adding that their regulation would be a matter for Congress or other agencies to consider.
TRUMP memecoin investors lose $2 billion
Peirce’s comments on the regulatory status of memecoins came on the same day that The New York Times reported massive losses by TRUMP memecoin investors.
Citing data from the blockchain intelligence firm Chainalysis, the report highlighted that at least 813,000 crypto wallets lost a total of $2 billion after buying TRUMP.
Launched on Jan. 17, TRUMP has plummeted about 80% since peaking at $72.60 on Jan. 19, with its market capitalization shrinking from $14.5 billion to $3 billion at the time of writing, according to CoinGecko data.
TRUMP memecoin price chart since launch on Jan. 17. Source: CoinGecko
While TRUMP investors have suffered billions in losses, the Trump Organization and its partners have reportedly earned $100 million in trading fees.
Memecoins are “more akin to collectibles,” says industry analyst
Memecoins are a type of cryptocurrency that originate from internet memes, jokes or cultural references. Unlike traditional crypto assets like Bitcoin (BTC) or Ether (ETH), memecoins are not associated with technological advancements but rather just aim to reflect community support and celebrity endorsements.
While saying that the SEC is not the right jurisdiction for regulating memecoins, Peirce — who also heads the SEC’s newly launched crypto task force — pointed to other parts of the government as competent authorities in that matter:
“If that’s something that Congress wants to address, they can do that. Maybe that’s something the CFTC [Commodity Futures Trading Commission] wants to address. But many of those, I think, probably are not within our jurisdiction.”
Some industry observers like ETF Store president Nate Geraci supported Peirce’s perspective on memecoins.
“Makes sense to me. Memecoins are more akin to collectibles, in my opinion,” Geraci wrote on X.
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Other analysts like macroeconomist Lyn Alden have compared memecoins to trends like initial coin offerings (ICO) and non-fungible tokens (NFT).
Source: Lyn Alden
“Having watched this space since 2017, I see a lot of the same patterns,” Alden wrote on X on Jan. 19
“The same bearish TradFi [traditional finance] accounts that dismissed Bitcoin due to mostly unrelated ICOs, DeFi [decentralized finance] and NFTs will now dismiss it due to memecoins. When they could just buy it and beat their own portfolios,” Alden said.
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