As we recently reviewed in The First Two Months of the SEC Under President Trump, since taking office for the second time, President Trump has moved quickly to make changes throughout the federal government in keeping with his campaign rhetoric. Among these has been changes to the Securities and Exchange Commission (SEC) and how it views digital assets, commonly referred to as cryptocurrencies.
In addition to changes in SEC leadership[1] and dropping a number of high-profile enforcement actions,[2] the SEC released a pair of statements that granted specific types of digital assets new freedom from prior agency policies.[3]
Prior Guidance
Until recently, under SEC chair Gary Gensler, the agency’s official position was that all digital assets were subject to a single, uniform interpretation. Further, Gensler’s SEC consistently expressed the opinion that existing legal guidance was sufficient to determine whether any given cryptocurrency qualified as a security.[4]
This meant that the SEC focused on traditional court-articulated tests, such as that set forth by the Supreme Court in SEC v. W.J. Howey Co. (the “Howey test”), and treated many cryptocurrency issuers as falling within the SEC’s registration requirements.[5]
“Meme Coins” Exempted from Registration
On February 27, 2025, the SEC’s Division of Corporation Finance issued a Staff Statement regarding so-called “meme coins.”[6] According to the statement:
A “meme coin” is a type of crypto asset inspired by internet memes, characters, current events, or trends for which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading.[7]
The statement went on to characterize meme coins as sharing a set of characteristics:
- The assets are purchased for entertainment, social interaction, and cultural purposes;
- The assets’ value is driven primarily by market demand and speculation; and
- The assets have limited or no use or functionality.[8]
Based on these qualities, the staff statement concludes that meme coins are “akin to collectibles,” are therefore not securities, and those who participate in the offer and sale of meme coins need not register under the Securities Act of 1933.[9]
The staff statement includes an analysis under the traditional investment contract test set forth in SEC v. W.J. Howey Co., pointing out that:
The offer and sale of meme coins does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.[10]
The staff’s analysis creates these carve-outs from the prior SEC view by articulating two conclusions:
- Meme coin purchasers are not making an investment in an enterprise; and
- There are no managerial and entrepreneurial efforts from which purchasers could reasonably expect profit.[11]
These points flow from the interaction between the “economic realities” reasoning of Howey once meme coins are viewed as collectibles rather than investment vehicles.[12]
“Stablecoins” Exempted
In a second, similar statement on April 4, 2025, the Division of Corporation Finance Staff expressed the opinion that the offer and sale of digital assets commonly referred to as “stablecoins” does not require registration.[13]
The statement describes stablecoins in general as having been developed with particular characteristics with which the digital asset is designed to:
- Maintain a stable value relative to a reference asset (such as the US dollar, a commodity such as gold, or a basket of assets); and
- Track the value of the reference asset on a one-for-one basis.[14]
These features are maintained by the issuer using methods to maintain the digital asset’s value, such as employing an algorithm to modify the stablecoin supply as demand fluctuates.[15]
The exemption, however, was limited to digital assets, termed “Covered Stablecoins,” that meet a narrower set of criteria, including that the digital asset is:
- designed and marketed for use as a means of making payments, transmitting money, or storing value;
- designed to maintain a stable value relative to USD;
- backed by USD and/or other assets that are considered low-risk and readily liquid and are held in a reserve with a USD-value that meets or exceeds the redemption value of the Covered Stablecoins in circulation; and
- minted and redeemed by the issuer on a one-for-one basis with USD at any time and in unlimited quantities.[16]
According to the staff’s analysis, Covered Stablecoins of this type are not securities, in part because purchasers and marketers do not view or hold them out as a source of interest/profit, a token of ownership in the issuer, a source of governance rights, or participation in a third party’s financial performance. In this way, the reasonable expectations of the investing public do not equate the Covered Stablecoin with potential profit or investment.[17]
The statement also describes features of the reserve, including that the reserve assets are:
(1) not used by the Covered Stablecoin issuer for operational or general business purposes;
(2) not otherwise lent, pledged, or rehypothecated for any reason; and
(3) held in a manner designed not to subject them to claims of third parties.[18]
In sum, qualification as a Covered Stablecoin is a much narrower niche than that for meme coins. Even so, many details of the reserves, algorithms, and marketing likely remain to be detailed.
Take-Aways
Notably, the Meme Coin Statement and Stablecoin Statement both included disclaimers to the effect that: (1) the statements are not rules, regulations, guidance, or statements of the SEC; and (2) they have no legal force or effect, do not alter or amend applicable law, and create no new or additional obligations.
However, Staff Statements of this type can offer insight into the reasoning, developing enforcement priorities, and broader regulatory direction of the revamped SEC.
Additionally, these Staff Statements appear to have shifted away from the prior use of the term “digital assets” in favor of the more colloquial term “crypto assets.”
We will continue to monitor developments in the SEC’s views on whether and the extent to which the broader category of crypto assets outside of the meme coin and stablecoin niches are to be treated as securities, and the extent to which these views are adopted by courts.
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[1] https://www.npr.org/2024/12/04/g-s1-36803/trump-crypto-paul-atkins-sec-chair
[2] https://www.sec.gov/newsroom/press-releases/2025-42
[3] https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins; https://www.sec.gov/newsroom/speeches-statements/statement-stablecoins-040425
[4] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets
[5] 328 U.S. 293 at 298-99.
[6] https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] https://www.sec.gov/newsroom/speeches-statements/statement-stablecoins-040425
[14] Id.
[15] Id.
[16] Id.
[17] Id.
[18] Id.
