In 2024, memecoin became one of the most traded and debated aspects of the cryptocurrency sector. Critics argue that they give the industry a bad image. Others enjoy the thrill of gambling and sometimes daunting returns. What will the outcome be like if the US government intervenes to regulate this controversial industry?
When the crypto sector won the moniker “Wild West”, Memecoin took responsibility. Thousands of new tokens are created daily via platforms such as pupp.fun. Investors – a mix of retailers, crypto insiders, influencers and sometimes institutional players – are all hoping to get the unlikely jackpot.
The enemy of Meme Coin is denounced the space that distracts from high-quality projects across the crypto sector. For example, the launch of the official Trump (Trump) token before its inauguration exemplifies this trend.
“The crypto sector put someone in power where the first act is to emphasize and utilize the opportunities for glyfting within the crypto,” crypto researcher Angela Walch told Time. “And that's just embarrassing.”
The meme coin-politics blending was not exclusive to the US in Argentina, and President Javier Mairay promoted the Libra token.
As Lyn Alden, founder of Lyn Alden Investment Strategy, he said in January: [traditional finance] Accounts that reject Bitcoin for ICOs, defi and NFTS that have little to do with it will now dismiss it for the coins of memes. ”
Democrats speak up
February 27th was marked with two important events in Meme Coin Space. First, the Securities and Exchange Commission (SEC) said securities regulations do not comply with meme coins.
Second, the Democrats' proposal for meme law aims to prevent American officials from launching their own meme coins, as Trump did before taking office. Are these events conflicting? Are meme coins very problematic? Let's break it down.
The launch of the official Trump token was controversial. Some were seen as a bold signal from the presidential election at the time. That means he's ready to accept the code. However, many in the crypto community have boosted the movement as blatant “glyft” given the decline in value within just a few days.
The New York Times collectively lost $2 billion to more than 800,000 people who invested in Trump Coin.
Another important point of criticism was that official Trump tokens could be lined up in Trump's pockets. Foreign political actors can easily finance him by purchasing a large number of Trump tokens (Trump has signed an executive order that freezes enforcement of foreign corrupt practices laws).
Various democratic representatives speak. California Democratic Rep. Sam Ricardo introduced the bill aimed at blocking US officials from creating tokens. Ricardo emphasized that Trump's memecoin “supposes concerns about transparency, insider trading and inappropriate foreign influence.”
The bill is to be dubbed modern emollion and fraud enforcement, or memes law, and now exists only as a draft. The law is set to block POTUS, members of Congress, and other high-ranking officials and family members from launching cryptocurrency.
More than that, the bill blocks the issuance or sponsorship of both securities and goods. The profits generated by Trump through the official Trump token must be decorated.
Ricardo doesn't believe the Republican-controlled House of Representatives will now support the bill, but he believes it will happen later when the “Trump cult” begins to deteriorate and more Republicans oppose him. That same week, it became known that the Trump family would create metaverses for brands that include the NFT market.
Was Gensler's SEC too easy with meme coins?
Critics of Biden-era crypto policy share the perspective that the Gary Gensler-led SEC deliberately ignored harmful meme coins while hunting legal crypto brands like Ripple and Coinbase.
This theory suggests that government agencies did not chase the thriving meme coin market. That's because it itself served as a boogeyman to change people against cryptocurrency. People were investing in meme coins and losing money. It created a favorable background for the SEC and served as a good excuse to curb legitimate crypto projects.
The SEC will stay, but warns about volatility
The SEC in the Gensler era was criticised for its constant equalization of cryptocurrencies against unregistered securities and effectively outlawed them, but the SEC in the crypto-friendly Hester-friendly Peirce era was stomped on when more than $2 billion was sucked up from the over 810,000 wallets holding official Trump.
Peirce has shown that the SEC is not responsible for handling meme coins as it is not classified as security.
On February 27, the SEC revealed its attitude by determining that memecoin is not a securities, but rather a collection of items. Therefore, it cannot be regulated by the SEC, and those who fire meme coins do not need to register them as securities.
Please note that the statement warns of the volatility of memecoin's important market price, and this disclaimer is usually present in the memecoin description. This ruling gives a green light and creates even more meme coins in the future.
The new SEC continues to move away from restrictions on meme coin space, but there are signs of a crisis in the sector. One of the main hubs of 2024 Meme Coin Revolution was Pump.Fun, a Solana-based launchpad that uses Crypto's IMGFlip (a platform known for creating memes and GIFs).
Tokens created with Pump.Fun have decreased by 80%. He attributes this decline to the controversial downfall of the Libra coin. However, tariff wars affecting BTC prices may be another powerful factor.
Memecoin is often compared to events such as the ICO boom and the NFT boom. This means that the dust will settle and the market will be re-adjusted.
Vitalik Buterin said the drawbacks of the ICO era were addressed through Defi Solutions. The memecoin market could also mature.
