SEC Commissioner Hester Peirce has said that meme coins like the Official Trump (TRUMP) token do not fall under the agency’s jurisdiction, even as investors face massive losses.
SEC Commissioner Hester Peirce has said that meme coins like the Official Trump (TRUMP) token do not fall under the agency’s jurisdiction, even as investors face massive losses. In an interview with Bloomberg on Feb. 11, Peirce stated that most meme coins likely do not fit within the existing regulatory framework of the Securities and Exchange Commission (SEC). She added that if any regulation were to be introduced, it would have to come from Congress or another agency like the Commodity Futures Trading Commission (CFTC).
Her comments came as reports surfaced of TRUMP meme coin investors collectively losing $2 billion in a matter of weeks. According to data from blockchain intelligence firm Chainalysis, at least 813,000 crypto wallets recorded losses after purchasing the token. TRUMP, which launched on Jan. 17, surged to a peak of $72.60 on Jan. 19 before dropping 80%, reducing its market capitalization from $14.5 billion to $3 billion, according to CoinMarketCap data.
Despite the losses, the Trump Organization and its partners have reportedly earned around $100 million in trading fees. The rapid rise and fall of TRUMP highlights the speculative nature of meme coins, which differ from traditional cryptocurrencies like Bitcoin and Ethereum in that they are often based on internet memes, jokes, or celebrity endorsements rather than technological advancements.
Industry analysts have weighed in on the nature of meme coins and their place in the financial market. ETF Store president Nate Geraci supported Peirce’s view, arguing that meme coins are more comparable to collectibles than regulated financial instruments. Macroeconomist Lyn Alden compared the current meme coin frenzy to previous trends in the crypto space, including initial coin offerings (ICOs) and non-fungible tokens (NFTs). Alden noted that since 2017, similar speculative cycles have emerged, with traditional finance analysts frequently dismissing Bitcoin based on trends in ICOs, DeFi, and NFTs, only to now do the same due to meme coins.
While Peirce maintained that the SEC is not the right agency to regulate meme coins, she acknowledged the broader regulatory uncertainty surrounding them. She suggested that if any legal oversight is needed, it would require congressional action or intervention by another financial regulatory body.
The collapse of TRUMP has once again brought attention to the risks of speculative crypto assets, particularly those tied to public figures or internet trends. While some investors have faced major losses, others have profited, raising questions about how such assets should be managed and whether new regulations are necessary. For now, meme coins remain largely unregulated, leaving investors to navigate the volatility on their own.
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