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By Chukwuma Umeorah
The Securities and Exchange Commission (SEC) has issued a warning to market operators about the risks of investing in instruments that fall outside its regulatory purview, specifically highlighting meme coins like $Davido.
The SEC cautioned that individuals who invest in these instruments do so at their own risk. “The Commission does not recognise $Davido as an investment product or investable asset class under its regulatory purview, as such individuals who patronise it, do so at their peril.
“Capital market operators are by this notice warned not to associate with such instruments and should not in any manner be distributed or monitored through any capital market mechanism.”
The Commission emphasised that meme coins are not intended to function as a medium of exchange for goods and services, nor do they represent capital market products such as shares, debentures, units of collective investment schemes, derivatives contracts, commodities, or other financial instruments. “Generally, meme coins are cryptocurrencies inspired by memes and internet jokes. They are often envisaged as a fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements,” the SEC noted.
The SEC advised the public that meme coins lack fundamental value and are purely speculative. “The general public is further warned that investing in meme coins, including $Davido, is highly risky and should be done with a full understanding of the associated risk,” the SEC cautioned.
The SEC also assured that It will continue to monitor developments within the ecosystem and will not hesitate to deploy its regulatory powers when required. “The Commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required,” the SEC concluded.
