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SEC reiterates its prohibition on meme token services by digital asset exchanges
Digital asset exchanges are prohibited from listing meme tokens, but brokers can offer meme token services if acting as intermediaries. Entities must send meme token trading orders as brokers, not exchanges. Influencers and partners must comply.
Bangkok, 7 May 2024 – Pursuant to the current rules for undertaking digital asset businesses, digital asset exchanges are prohibited from listing meme tokens to maintain orderliness in digital asset trading and protect investors against unfair activities as well as mitigate the risk of price manipulation as meme tokens lack fundamental factors and rely on individual preferences.
However, the rules do not prohibit digital asset brokers from providing meme token services to clients on the condition that they must act as broker or agent in trading and exchanging digital assets for clients, and must ensure that clients receive the best execution terms from various sourced exchanges to which the brokers have linkage.
The SEC reiterates that any entity holding both digital asset exchange and brokerage licenses intending to offer meme token trading services must send such trading orders to sourced exchanges solely in their capacity as broker, without misleading the general public into believing that the orders are serviced by digital asset exchange. Moreover, influencers and trading partners must also adhere to this principle.
The SEC rules aim to protect investors, maintain market integrity, and support financial innovations suitable for each type of digital asset business, without imposing undue burdens on businesses.
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