SEC backs off meme coin regulation as crypto industry cheers

The U.S. Securities and Exchange Commission (SEC) has quietly abandoned its crackdown on meme coin regulation, marking a seismic shift in Washington’s approach to cryptocurrency oversight. The decision, which exempts tokens like the Trump-affiliated $TRUMP from securities laws, has ignited fierce debate about investor safety and political influence in the unregulated crypto wild west.

SEC commissioner Hester Peirce: “Don’t expect protection” on meme coins

In a bombshell interview, SEC Commissioner Hester Peirce confirmed the agency will no longer intervene in meme coin regulation, bluntly stating:

“Investors should not expect [SEC] protection when trading these assets.”

The policy reversal comes just months after ex-President Donald Trump’s $TRUMP token skyrocketed to a $15 billion valuation, then crashed amid allegations of market manipulation.

Peirce argued that most meme coins fail to meet the legal definition of securities. Yet critics fear the hands-off approach to meme coin regulation creates a playground for scams.

“This isn’t just about financial risk,” warned Senator Richard Blumenthal.

“It’s about foreign powers or corporations buying political influence through these tokens.”

Inside the $TRUMP token controversy

The SEC’s retreat on meme coin regulation follows intense scrutiny of Trump’s eponymous token. Launched ahead of his 2025 inauguration, $TRUMP collapsed days after reports revealed 80% of its supply was controlled by Trump-affiliated entities. While the White House denies conflicts of interest, ethics watchdogs highlight how presidential statements could sway the token’s value, with no meme coin regulation to prevent insider advantages.

“This isn’t just a financial free-for-all, it’s a national security blind spot,”

Blumenthal added, noting hostile governments could exploit lax meme coin regulation to fund political interference.

Binance lawsuit dropped as crypto rules soften

The SEC’s looser stance on meme coin regulation coincides with another surprise move: dropping its high-profile lawsuit against Binance. The agency had accused the exchange of commingling funds and serving restricted U.S. clients, charges now shelved despite founder Changpeng Zhao’s recent money laundering conviction.

Analysts see a pattern. “The SEC is rewriting the rulebook in real time,” said crypto lawyer Rebecca Rettig. First came February’s memo excluding meme coins from securities laws.

Then came the repeal of Staff Accounting Bulletin 121, which had blocked banks from holding crypto. Now, with meme coin regulation off the table, the message is clear: “Enforcement-first policy is over.”

A new era—or a regulatory vacuum?

Peirce insists the shift toward clearer rules beats arbitrary crackdowns. But with meme coin regulation effectively dead, investors face stark realities:

• No SEC safeguards against pump-and-dump schemes

• No transparency requirements for token creators

• No recourse when projects like $TRUMP collapse

“The market will decide what succeeds,” said Peirce.

Critics counter that without meme coin regulation, the “market” is just unchecked speculation, with ordinary investors holding the bag. As Trump’s token proves, when hype replaces oversight, the only sure winners are those controlling the game.