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The U.S. Securities and Exchange Commission (SEC) has announced that memecoins do not fall within its regulatory jurisdiction. This declaration has reignited discussions about cryptocurrency regulations, particularly in light of the recent launch of Trump Coin. SEC Commissioner Hester Peirce emphasized that memecoins are not under the SEC’s purview according to current legislation, highlighting various perspectives on regulatory gaps and the lack of oversight in the sector.
Ambiguity Over Authority on Memecoins
Commissioner Peirce indicated that memecoins may be subject to a different legal framework and that Congress or the Commodity Futures Trading Commission (CFTC) could potentially enact regulations. Her statements have once again brought to light the legal oversight deficiencies faced by memecoins due to regulatory loopholes, posing potential risks for both investors and regulators.
The confusion over authority has made newly launched memecoins particularly susceptible to manipulation, prompting calls for investors to approach these assets with caution.
Trump Coin Launch and Market Volatility
The launch of Trump Coin garnered significant attention but also led to abrupt price fluctuations in the market. Initially soaring in value within the first 24 hours, Trump Coin later experienced a severe drop. According to Chainalysis data, approximately one million wallet holders collectively lost around 3 billion Australian dollars.
Notably, the Trump Organization reportedly profited from significant transaction fees through exchanges during this volatile period. However, these sharp fluctuations have raised concerns over the reliability of memecoins.
The example of Trump Coin illustrates how the lack of regulation can lead to uncontrolled volatility in the memecoin market. The risks of sudden price swings and manipulation underscore the pressing need for more robust regulation.
