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Matthias Knab, Opalesque for New Managers:

In a significant clarification for the digital asset industry, the Securities and Exchange Commission's Division of Corporation Finance issued a formal statement on February 27, 2025, declaring that typical "meme coins" do not constitute securities under federal securities laws.

This statement provides much-needed regulatory clarity in a space that has seen significant institutional interest despite its historically retail-focused origins. For hedge funds with digital asset exposure or those considering allocation strategies that might include meme coins, this development removes a key regulatory uncertainty.

According to the SEC's statement, meme coins are "a type of crypto asset inspired by internet memes, characters, current events, or trends for which the promoter seeks to attract an enthusiastic online community." The regulator identified several defining characteristics:

• Typically purchased for entertainment, social interaction, and cultural purposes
• Value driven primarily by market demand and speculation
• Limited or no functional utility
• High market price volatility
• Often accompanied by risk statements and acknowledgments of their lack of utility

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