Commissioner Caroline Crenshaw said that the agency’s working definition of memecoins was vague and could be easily misconstrued.
Caroline Crenshaw, a commissioner at the United States Securities and Exchange Commission, has expressed her disagreement with the United States Securities and Exchange Commission’s recent decision that memecoins do not qualify as securities.
According to the commissioner’s February 27 statement, memecoins may meet the Howey test, which requires profiting from others’ management. This is because of the coordination that exists between developer teams and promoters.
The commissioner also stated that the SEC’s new guidelines, released on the same day, could classify most cryptocurrencies as memecoins. The government agency provided this guidance, in which it claimed that memecoins are not securities but rather represent online social trends that have a high degree of volatility and a speculative value.
Commissioner Crenshaw, however, has a different perspective: Memecoins have been under increased scrutiny as a result of several high-profile scams, hacks, and even presidential memecoin launches.
US regulators and lawmakers attempt to reign in memecoins
These incidents pose a threat to the long-term stability of the industry and invite inquiry from governmental officials. Several Democratic senators, including Elizabeth Warren, have asked for a probe into possible violations of ethics that may have occurred with the presidential token following the launch of the memecoin by President Donald Trump of the United States.
Senator Sam Liccardo of California made the announcement on February 27 that Democrats in the House of Representatives are working on drafting a measure that will prohibit the usage of presidential memecoins.
With the passage of the proposed legislation, which would be known as “The Modern Emoluments and Malfeasance Enforcement (MEME) Act,” it would be illegal for lawmakers in the United States to sponsor, issue, or endorse any digital asset.
Additionally, the measure prohibits the issuance or sponsorship of memecoins by wives and dependents of senior executives in the executive branch, as well as the president, vice president, and representatives of the United States from the executive branch.
Recently, counsel Elizabeth Davis, who had previously served as the chief counsel at the Commodity Futures Trading Commission (CFTC), suggested that the CFTC ought to be in charge of regulating memecoins.
Davis stated that there is a high probability that memecoins will fall within the jurisdiction of the commodities regulator provided that the commodities regulator is allowed regulatory supervision over cryptocurrency.
The attorney also expressed optimism that full legislation regarding memecoins would be implemented in the United States within the next year, putting an end to the regulatory ambiguity that has been surrounding social tokens.
