The Securities and Exchange Commission (SEC) has issued guidance stating that most meme coins, a type of cryptocurrency that originated from internet memes, are not considered securities under United States federal law. This move marks a significant shift in the regulatory landscape for cryptocurrencies, and has major implications for investors and crypto service providers.

According to the SEC, individuals who purchase or hold meme coins are not protected by federal securities law, and those who participate in the offer and sale of meme coins do not need to register their transactions with the Commission. This guidance comes roughly a month into U.S. President Donald Trump's second term, during which he issued an executive order to create the Department of Governmental Affairs, led by Elon Musk, an independent government advisory agency named after the meme coin, Dogecoin.

President Trump also launched a meme coin for his supporters, called $TRUMP, just days before his inauguration. However, since its peak on January 19, the coin has lost $12 billion in value, according to a report by The Telegraph on Thursday. Despite this, the SEC's stance on meme coins is a significant departure from its previous stance under former chairman Gary Gensler, who repeatedly called for crypto tokens, including meme coins, to be treated as securities.

The SEC's chairman, Mark Uyeda, appointed by Trump in January, had previously signaled his intention to create clear regulatory lines around cryptocurrencies. On his first day in office, Uyeda announced the formation of a cryptocurrency task force. The SEC argues that meme coins are not securities because they do "not generate a yield or convey a right to future income, profits, or assets of a business." Instead, the Commission views meme coins more like collectibles.

Thursday's guidance on meme coins represents a stark contrast to the SEC's previous stance on crypto tokens. The agency's new approach is seen as a more relaxed stance on cryptocurrencies, and is likely to be welcomed by the crypto community. The SEC's decision to dismiss its lawsuit against Coinbase, the United States' largest cryptocurrency exchange, also announced on Thursday, further underscores this shift.

In a statement, Uyeda said, "For the last several years, the Commission's views on crypto have been largely expressed through enforcement actions without engaging the general public. It's time for the Commission to rectify its approach and develop crypto policy in a more transparent manner." This statement suggests that the SEC is committed to taking a more collaborative and transparent approach to regulating cryptocurrencies, which could lead to greater clarity and certainty for investors and crypto service providers.

The implications of the SEC's guidance on meme coins are far-reaching. It could lead to increased adoption and innovation in the crypto space, as well as greater mainstream acceptance of cryptocurrencies. However, it also raises questions about the potential risks and consequences of a more relaxed regulatory environment. As the crypto landscape continues to evolve, it remains to be seen how the SEC's stance on meme coins will shape the future of cryptocurrencies.