Former Commodity Futures Trading Commission (CFTC) Chair Chris Giancarlo believes that SEC contributed to the development of memecoins, which have increased their dominance in the cryptocurrency market.
He attributed that this was due to the increased enforcement by the SEC of activities associated with utility and value. In his interview on the Thinking Crypto podcast, Giancarlo said that the SEC crackdown campaigns on the altcoins paved the way for memecoins. Based on his argument, the regulator conveniently went after tokens with actual use and left memecoins as the preferred investment option.
“They attacked anything with value associated with it. So they created a landscape where memecoins, effectively worthless, were the only thing you could do,” Giancarlo stated. He claimed that the SEC enforcement model was an “abuse of authority,” which he said slowed the development of the crypto industry.
The ex-chair of the Commission on Futures Trading is not the only one in the industry to hold this opinion. The former CEO of Binance, Changpeng “CZ” Zhao, has also attributed the growth of memecoins to the actions of the SEC. Zhao made this assertion when he said that the regulator’s lawsuits against utility tokens led the sector towards memecoins.
“During the last four years, a powerful regulatory agency sued almost anyone with any utility token, falsely claiming they are securities. So, people started to launch memes,” Zhao stated.
SEC’s jurisdiction over memecoins questioned
While some industry players argued that the SEC determines the market, SEC Commissioner Hester Peirce suggested the SEC isn’t tasked with regulating memecoins.
In a recent Bloomberg interview, Peirce said, “We always have to look at the facts and circumstances, but many of the memecoins that are out there probably do not have a home in the SEC under our current set of regulations.”
She also said that it might fall under CFTC or require more legislation from Congress. However, unlike Bitcoin and Ethereum, among others, most memecoins are useless and do not have any intrinsic value.
This is in contrast to the approach of the SEC under its former chairman, Gary Gensler, who claimed almost all digital assets are securities except for Bitcoin. Following Gensler’s resignation, Acting Chair Mark Uyeda announced a Crypto Task Force that would be led by Peirce.
A survey by Coinwire showed that 76% of influencers on X promoted memecoins that are now ‘dead.’ Additionally, it has been found that about 80% of the memecoins recommended by influencers have declined by 70% in one week.
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