On February 25, 2025, we published a blog titled: "Recent developments in the U.S. SEC's proceedings against major crypto players signals pro-industry policy shift", which discussed the new U.S. administration welcoming a "crypto-friendly" era, and the corresponding policy changes and statements from the U.S. Securities and Exchange Commission (the SEC). In this blog, we discuss recent updates that have emerged in the past few weeks highlighting this policy shift, including the SEC's statement that most "meme coins" are not subject to U.S. federal securities regulations, the White House's hosting of an inaugural crypto summit, and the creation of a "federal bitcoin reserve".
It remains to be seen whether the direction taken to date by American authorities will impact Canadian regulators in their approaches to digital assets. A clear regulatory framework that explicitly addresses digital assets would certainly be welcome.
Meme coins
On February 27, 2025, the Division of Corporate Finance of the SEC announced in a statement (the Statement) that the cryptocurrency assets known as "meme coins" are not subject to U.S. federal securities regulations.
A meme coin is a type of cryptocurrency asset inspired by internet memes, characters, people and events. This type of coin is usually created to engage a community, facilitate entertainment, and "go viral". Meme coins typically have limited or no use or functionality. Rather, their value is driven by market demand and speculation. Meme coins are typically purchased for entertainment, social interaction and cultural purposes.
The Statement
According to the SEC's Statement: "transactions in the types of meme coins described in this statement, do not involve the offer and sale of securities under the federal securities laws". As such, persons who participate in the offer and sale of the type of meme coins described in the SEC's Statement do not need to register their transactions with the Commission under the Securities Act or fall within one of the Securities Act's exemptions from registration.
In the Statement, the SEC states that a meme coin does not constitute any of the common financial instruments specifically enumerated in the definition of "security" because it does not generate a yield or convey rights to future income, profits or other assets in the business. Further, meme coins are not "investment contracts" because coin purchasers are not making an investment in a common enterprise, and any expectation of profits is not derived from the efforts of others (based on the test set out in SEC v. W.J. Howey Co. (1946)). The promoters of meme coins are not undertaking managerial and entrepreneurial efforts from which purchasers could reasonably expect profit. Meme coins are more akin to collectibles.
The result of the SEC's Statement is meme coin purchasers and holders are not protected by federal securities laws. As a result, purchasers of meme coins do not benefit from a disclosure regime or other types of protections under the Securities Act and must be cautious in purchasing these assets. However, the SEC noted that the Statement does not extend to the offer and sale of meme coins that are inconsistent with the descriptions contained in the Statement, or products that are labeled "meme coins" in an effort to evade the application of federal securities laws. The SEC will evaluate the economic realities and substance of the particular transaction in question. The court also likely will be faced with cases where it must determine the facts and economic realities of a transaction to decide whether the crypto asset in question is actually a meme coin or something else that would afford more protection to the purchaser.
Further, fraudulent conduct related to the offer and sale of meme coins may still be subject to enforcement action or prosecution by other federal or state agencies under other federal and state laws. Given that meme coins are not securities, they are generally considered to be commodities. Therefore, it is predicted that the U.S. Commodity Futures Trading Commission will take a more active enforcement role in case of fraud or price manipulation of meme coins.
MEME Act
The Statement comes as California Democrat Rep. Sam Liccardo announced his intention to introduce legislation that would prohibit elected officials and their families from profiting from personal meme coins, taking aim at the $TRUMP meme coin. This legislation, which would be known as the Modern Emoluments and Malfeasance Enforcement (MEME) Act, would prohibit elected officials such as the president, vice president, members of Congress, senior executive branch officials, and their spouses and dependent children, from issuing, sponsoring or endorsing a security, future, commodity or digital asset.
The White House crypto summit
On March 7, 2025, the White House hosted the inaugural crypto summit, bringing together leaders from across the digital asset space. President Donald Trump led a public press conference of the crypto summit and conducted a private conference with the executives of the leading crypto companies. In his public statements, he criticized former President Joe Biden for his anti-crypto stance, asked Congress to pass bills on stablecoins and digital asset frameworks, and allowed FIFA president Gianni Infantino to pitch the idea of creating a FIFA meme coin. The crypto summit is a clear signal that the crypto sector now has a direct line to high-level government discussions.
Federal bitcoin reserve
The summit came a day after Trump issued an Executive Order announcing the creation of a federal Bitcoin reserve. The Executive Order announced that the U.S. would not buy any new bitcoin but would hold onto the cryptocurrencies that they had obtained through seizures. The Executive Order also calls for a full audit of the U.S.'s crypto holdings, which is estimated to include approximately 200,000 bitcoin. After the summit, President Trump's Office of the Comptroller of the Currency (OCC) issued guidance allowing banks to hold cryptocurrency, and asking them to do their own diligence around risk.
Implications
It remains to be seen what impact the U.S. crypto-friendly stance and corresponding policy changes will have on American and Canadian investors. As of the date of this blog, securities regulators in Canada have not yet taken a public stance on "meme coins" and, most certainly, have not embraced crypto as readily as the current U.S. administration.
As we wrote in "Recent developments in the U.S. SEC's proceedings against major crypto players signals pro-industry policy shift", the clear shift in priorities of the U.S. administration and, correspondingly, the SEC, suggests substantial change — potentially leading to greater regulatory clarity, crypto-specific legislation, and shifting enforcement priorities — in the coming months (and years). As we have written about extensively in the 2024 Osler Legal Outlook, Canadian regulators are also wrestling with who has authority to regulate the crypto industry, and on what basis.
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