Make Memecoins Great Again?” The Party of Trump’s Meme Coin and the Hidden Worries
On January 18, U.S. President-elect Donald Trump announced the launch of his exclusive cryptocurrency meme coin, $TRUMP, through social media. The news instantly ignited the cryptocurrency market, with $TRUMP’s market capitalization surpassing $24 billion on its first day, making it the undeniable focal point of the industry. From retail investors to seasoned traders, almost everyone exhibited overwhelming enthusiasm for this meme coin, which carries Trump’s unmistakable personal branding.
Meme coins are cryptocurrencies designed around internet culture, characterized by high entertainment value and viral appeal. These coins often capitalize on trending figures or events to attract investor interest, relying more on market sentiment than intrinsic economic functionality. From early examples like Doge coin (DOGE) to more recent ones like Pepe, meme coins have always thrived on speculative enthusiasm. The launch of $TRUMP, leveraging Trump’s strong personal brand and its unique fusion with political narratives, has once again propelled the meme coin market to new heights.
According to Trump’s team, the purpose of $TRUMP is to “celebrate a leader who does not back down in the face of adversity.” This meme coin not only revolves around Trump’s political persona but also integrates his assassination attempt during the 2024 campaign into its narrative, further amplifying market emotional resonance. Combined with Trump’s commitment to supporting the cryptocurrency industry, investors are brimming with expectations for $TRUMP’s future.
Trump’s Personal Entry: A Milestone in Sending Positive Signals
Trump’s launch of his exclusive meme coin, $TRUMP, represents a significant innovation in both the cryptocurrency market and the political realm. Not only did he personally engage in the market as the president-elect, but he also chose the most down-to-earth method—issuing a meme coin, which aligns with the current bull market trend where investors prefer on-chain transactions and avoid traditional VC-backed tokens. This move indicates that Trump is no longer merely supporting cryptocurrency as a policymaker or investor; instead, he is extending his political influence directly onto the blockchain through the issuance of a coin. As the first U.S. president to issue a meme coin, Trump’s actions provide a form of “legitimization” endorsement for the meme coin sector, potentially attracting more mainstream attention and opening up new possibilities for blockchain in political and social mobilization.
From Meme Frenzy to Rational Reflection
However, behind the frenzy of meme coins lies not only the wealth effect and political signals but also complex compliance risks. As cryptocurrency gradually becomes a regulatory focus for countries around the world, Trump’s move undoubtedly brings cryptocurrency back into the spotlight.
In terms of securities regulatory risks, a key question is whether this meme coin constitutes an unlicensed public offering of securities, which is a crucial factor affecting its legal compliance. In the United States, the Securities and Exchange Commission (SEC) typically uses the Howey Test to determine whether an asset qualifies as a security. The test assesses three elements: investment of money, expectation of profits, common enterprise, and derivation of profits from the efforts of others. Given the current situation, investors in $TRUMP is strongly endorsed by Trump, and its value appreciation depends to some extent on the promotion and management by Trump’s team, which may meet the fourth element of the Howey Test. Although Trump’s team has stated on the $TRUMP official website that this cryptocurrency is not a security, the legal binding force of such a disclaimer remains highly uncertain.
It should be noted that meme coins are significantly different from traditional securities (such as stocks and bonds). Meme coins typically lack intrinsic value or functionality, and their price fluctuations are mainly driven by market sentiment and speculative trading. Unlike stocks, meme coins do not represent ownership in a company and do not promise returns. Moreover, the management and governance of meme coins are usually community-driven, without excessive intervention from early investors or founders. Therefore, it is difficult to argue that any profit or utility is derived from the efforts of others. Essentially, meme coins do not fit the U.S. legal definition of securities. However, the SEC’s regulation of cryptocurrencies is becoming stricter, and its stance on meme coins is still unclear. Although meme coins may not meet the traditional standards of securities, if their market performance and investor expectations lead them to be considered as investment contracts, they could still be deemed securities. This would trigger severe legal consequences, including fines, prosecution, and potentially the need to refund investors’ losses.
The second issue is tax compliance. According to the regulations of the Internal Revenue Service (IRS), capital gains from investing in cryptocurrencies are considered taxable income. The Trump team holds 80% of $TRUMP constitutes a taxable event is noteworthy. U.S. tax law stipulates that capital gains tax obligations are triggered only when assets are disposed of. Therefore, the unlocking of cryptocurrency itself is generally not considered a taxable event unless the cryptocurrency is sold or used for transactions. Once cryptocurrency is traded or converted into other assets in the market, capital gains must be calculated based on the market price at the time of the transaction and taxes must be paid. After $TRUMP, determining the cost basis of the cryptocurrency can be very complex. In particular, if the Trump team chooses to sell these cryptocurrencies in batches, the timing and market price of each transaction will affect the calculation of their capital gains. Without proper documentation of each transaction, tax reporting will become very troublesome.
Furthermore, the issuance of meme coins may also trigger controversies regarding political donations. Due to the anonymity and global liquidity of cryptocurrencies, they provide a more covert channel for political contributions. In the United States, the Federal Election Commission (FEC) has strict transparency requirements and limits on political donations. If $TRUMP as a form of political donation, it could severely disrupt the existing political donation order in the United States and raise significant suspicions of bribery. Moreover, Trump’s issuance of the coin before officially taking office might be an attempt to avoid accusations of misusing public power for personal gain, but even so, it could still have many negative impacts, especially if the coin price plummets, Trump’s political credibility could be severely damaged.
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Summary
Trump’s launch of the $TRUMP meme coin is undoubtedly a bold experiment with both political significance and market influence. In terms of market performance, it has successfully ignited investment enthusiasm in a short period and brought the digital asset category of meme coins to an unprecedented level of popularity. However, behind this frenzy, the hidden legal risks and compliance pitfalls are equally alarming. The future of meme coins may either continue as a prolonged frenzy or gradually return to rationality due to stricter regulations. For the entire industry, this event is both a moment in the spotlight and a public discussion on compliance risks. Both issuers and investors need to realize that only by advancing innovation on the basis of legality and compliance can the cryptocurrency industry truly achieve maturity and stability.