Memcoining is legal. Or at least they’re not securities.
On February 27th, the Securities and Exchange Commission stated in its latest staff statement that memecoins are not necessarily securities
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“Although the offer and sale of meme coins may not be subject to the federal securities laws, fraudulent conduct related to the offer and sale of meme coins may be subject to enforcement action or prosecution,” writes the SEC.
This clarity is important, but it reveals nothing about what the policies around memecoins, rugpulls, and crypto scams should actually be.
This month has already delivered us Argentine President Javier Milei’s promotion of a pump-and-dump memecoin called LIBRA. At this moment, Barstool Sports founder Dave Portnoy is probably pumping his third or fourth favorite memecoin into oblivion while he dumps on retail.
In each of these cases, these tokens are created with copy-paste smart contracts, influencers singing their praises, and people exchanging their stablecoins, bitcoin, or some other altcoin for the hope of making it rich.
Of course, in a free country people should be free to bet on things they want. But they should be prepared to lose just as much as they’re prepared to win.
To the uninitiated, these scams represent “crypto” writ-large, lumping the original decentralized protocol of Bitcoin with pump and dump scams from platforms like pump.fun that run on Solana and other chains.
Knowing what we know, and how desperate parts of the crypto market are for outrageous tokens and leveraged degen trading, we must naturally ask how Bitcoin can fix this. Or, rather, how smart Bitcoin policies can fix this.
As I have written for several years, we as Bitcoin advocates should promote sound policies that will encourage innovation and increase economic inclusion across all income groups, all the while protecting consumers from harm. We want to avoid blowouts like FTX, Celsius, and even stablecoins projects like TerraUSD – not only because they defraud bitcoiners, but because they sully the reputation of our entire sector of technological innovation.
Because Bitcoin represents scarcity, decentralization, and complete transparency, there is much we can learn from Satoshi’s innovation when we’re dealing with next-level crypto-offspring.
To begin, US federal, state, and local agencies should update their technological stack to rigorously identify and prosecute fraud and abuse in crypto projects. Fraudulent claims, fake token whitepapers, and deceptive tactics are already illegal under existing law. Our agencies should be empowered to enforce existing law and weed out the bad actors.
Whether that means better training or tools, law enforcement should receive the necessary upgrades to prosecute and identify the real fraudulent crime that happens to take place in crypto protocols. Much of this behavior is just being used in a new medium. It’s not crazy to think that cops should upgrade their tech stack to understand how it’s happening now.
Second, our policies on money transmission licenses and regulation for crypto exchanges should be streamlined and made easier, rather than more difficult. Let competition provide the best places for people to buy their bitcoin. As much as privacy advocates abhor centralized platforms and exchanges, they still implement better security and educational practices to inform users than a shady service hosted in China will provide.
By simplifying the rules and restrictions on bitcoin exchanges, especially by allowing them to consider their custodied bitcoin as assets rather than liabilities as was done by rescinding SAB 121, it means that more Americans will have the opportunity to have excellent experiences when purchasing their coins online.
Third, regulators must not pigeonhole bitcoin and its crypto-offspring only as investments fit for taxing, but rather as technological tools that empower consumers and foster innovation. Too much discussion about bitcoin policies hinges on the tax rate or how much it will bring to state coffers, rather than by how much it can make one’s life better by removing the red tape to safeguard wealth.
By recognizing the ultimate power of bitcoin self-custody without needing to trust third parties or intermediaries, it means we finally view this technology as an extension of our own free speech and freedom of association.
And lastly, we must focus on removing the barriers to using bitcoin as an ordinary means of payment. The Keep Your Coins Act restricts federal agencies from stopping individuals from using bitcoin how they see fit, as well as protecting self-custody. That, plus de minimis exemption rules that allow us to spend bitcoin as any other asset, mean we can use digital money as intended.
We know that memecoins and rugpulls will continue to happen no matter what, this is almost human nature. But at the same time, embracing smart bitcoin policies will ensure that consumers and users have the best tools and protections available to use the technology if they want.
