The Securities and Exchange Commission (SEC) has released new guidance stating that most meme coins, which are cryptocurrency tokens originating from internet memes, are not considered securities under federal law in the United States.

Consequently, the SEC believes that individuals who buy or hold meme coins are not protected by federal securities laws, and those involved in the sale and offer of meme coins do not need to register their transactions with the Commission.

This guidance from the SEC comes approximately a month after U.S. President Donald Trump began his second term, during which he issued an executive order to establish the Department of Government Efficiency, led by Elon Musk. This independent government advisory agency is named after the popular meme coin, Dogecoin.

President Trump also introduced a meme coin called $TRUMP for his supporters just before his inauguration. However, since its peak on January 19, the coin’s value has decreased by $12 billion, as reported by The Telegraph on Thursday.

Mark Uyeda, the SEC chairman appointed by Trump in January, had previously indicated his intention to establish clear regulatory guidelines for cryptocurrencies. On his first day in office, Uyeda announced the formation of a cryptocurrency task force to oversee the industry.

According to Uyeda’s SEC, meme coins are not considered securities because they do not generate yields or provide rights to future income, profits, or assets of a business. Instead, the Commission views meme coins as similar to collectibles.

The SEC’s recent guidance on meme coins marks a significant departure from the stance of its former chairman, Gary Gensler. Gensler had consistently advocated for the treatment of crypto tokens, including meme coins, as securities and urged crypto service providers to register with the SEC proactively.

In a related development, the SEC announced on Thursday that it has dismissed its lawsuit against Coinbase, the largest cryptocurrency exchange in the United States.

According to Uyeda, “For the past several years, the Commission’s views on crypto have been primarily expressed through enforcement actions without engaging the broader public. It’s time for the Commission to reevaluate its approach and develop crypto policy in a more transparent and inclusive manner.”