Memecoins and regulation: what is important to know in 2025
Introduction
Memecoins are highly volatile cryptocurrencies gaining popularity through viral marketing and social media hype. However, serious risks lurk behind their playful exterior. In 2024, memecoins became the target of numerous fraudulent schemes, such as "rug-pulls," resulting in losses of over $500 million (according to Merkle Science; CoinDesk, Feb 11, 2025).
These tokens have also come under close regulatory scrutiny. For instance, in its statement on February 27, 2025, the SEC indicated that memecoins are generally not classified as securities, but their listing and use are still subject to AML and KYC requirements. In the EU, the Markets in Crypto-Assets Regulation (MiCA) is tightening transparency and user protection rules: the regulation entered into force in June 2023, with key provisions becoming applicable on December 30, 2024 (certain provisions for specific types of tokens began to apply from June 30, 2024).
Why is this important? Memecoins remain high-risk assets, and a lack of due diligence can lead to significant financial losses.
Breaking Down the Situation
What does the SEC regulate?
According to the SEC statement (Feb 27, 2025), memecoins do not always fall under the definition of securities; however, this does not exempt them from other regulatory requirements. For example, exchanges are required to ensure KYC compliance and implement AML screening mechanisms to combat "dirty crypto."
What does MiCA say?
The MiCA regulation, which came into force in the EU in June 2023, requires issuers of crypto-assets (including memecoins falling under the regulation's definition) to disclose key information in a whitepaper and comply with transparency and governance requirements. Some MiCA provisions have applied since June 30, 2024, to certain types of tokens (e.g., ART and EMT), while most of the remaining requirements became applicable on December 30, 2024. In Ireland, for instance, national regulations were introduced to delegate oversight to local regulators (S.I. No. 607/2024).
Scale of Threats
In 2024, the crypto industry lost approximately $3.01 billion to hacks and scams (PeckShield, 2025). Memecoins account for a significant portion of these losses due to low transparency and the concentration of liquidity in a few addresses.
Risks for Users
- Retail Investors. Beginners without experience in smart contract analysis often fall victim to scammers.
- Custodial Risks. Storing funds on centralized exchanges increases the likelihood of account freezes or loss of assets.
- Social Manipulation. Memecoins rely heavily on hype from Twitter and Telegram, creating a risk of sharp price fluctuations.
How to Protect Yourself
Quick checklist before buying a memecoin
- Verify the contract. Ensure the smart contract address is verified via Etherscan or Solana Explorer.
- Check liquidity. Ensure liquidity is locked and contract ownership has been renounced.
- Study the audit. Check if a smart contract audit was conducted and how reliable the auditor is.
- Address analysis. Find out if the majority of tokens belong to anonymous wallets.
- Assess risks. Never invest more than you are prepared to lose.
Tools and Services
- Use services such as Token Sniffer, PeckShield, and Chainalysis for analysis.
- Check addresses for sanction labels through AML screening.
What to do in case of fraud
- Save all evidence: transaction hashes, wallet addresses, and correspondence.
- Contact the exchange's support service and local law enforcement.
- Consider involving analytical companies such as Merkle Science or Chainalysis to track lost funds.
The Role of AML Screening
AML screening (Anti-Money Laundering) helps identify links between addresses and illegal activity, "dirty crypto," and sanction labels. This is a vital tool that allows both users and exchanges to minimize risks.
- For users: check addresses before transferring funds. If an address is linked to fraud, your assets may be blocked.
- For exchanges: implementing automated transaction monitoring systems helps comply with MiCA and other regulatory requirements.
Conclusion
Memecoins are a tool with high potential but equally high risks. To minimize threats:
- Follow safety measures, including address verification and using cold wallets.
- Stay informed about regulatory changes, especially in your jurisdiction.
- Invest only in vetted projects and do not exceed a reasonable allocation of memecoins in your portfolio.
Regulatory measures like MiCA and SEC requirements are gradually making the industry more transparent, but the responsibility for security always remains with the user.