Memecoin Controversy Will Help The Crypto Market
Memecoins have been a part of the cryptoasset ecosystem virtually ever since the asset class achieved mass market awareness and appeal during 2017-2018. While most memecoin projects have been revealed, time and again, as grifts, pump-and-dump schemes, or otherwise unethically motivated ventures, the appeal of these projects continues to be obvious. For investors seeking to dabble into the crypto world in a casual way, or for investors looking to capitalize on a short-term spike in popularity, memecoins continue to offer an alluring path to (allegedly) easy profits. Of course, memecoins cannot be fully discussed without mentioning Dogecoin, one of the earliest to market – and most popular – memecoins that has been mentioned and supported by business tycoon Elon Musk.
Recently the discourse around memecoins, and dragging the rest of the crypto landscape along as well, has turned decidedly political, as Democratic lawmakers have responded to several announcements by the Trump administration related to projects affiliated with the President's family. Two specific items that have thrust memecoins into the spotlight, and might potentially derail the GENIUS Act, include the following. First, an announcement on the Trump memecoin website inviting top investors to an intimate private dinner with VIP White House Access ruffled feathers. Secondly, the potential $2 billion investment by an Emirati state-backed venture into World Liberty Financial led to accusations of commingling transforming into legislative action.
Setting politics aside, which in the current political environment is increasingly difficult, there are several lessons that the crypto market can learn from the controversy swirling around the memecoin marketplace.
The fact remains that the vast majority of memecoins are speculative investments versus legitimate investment vehicles, and this needs to be understood by the wider marketplace as cryptoassets continue to make inroads across the board. Specifically, $500 million was lost memecoin scams and rug pulls in 2024, with notable celebrities being impersonated leading to notable losses that included French football star Kylian Mbappe and music artist Wiz Khalifa. This also ties into another point that investors and policymakers alike need to increase efforts around; reducing the amount of fraud and social engineering attacks via social media. According to research by Merkle Science approximately 75% of memecoin related scams and rug pulls took place on X, and 19% took place on YouTube. Given the influence of social media in the crypto community, ensuring that only quality information is circulated with increase in importance moving forward.
Regardless of which celebrity or politician is involved, or which political affiliation those individuals happen to have the real impact of this memecoin crackdown should be that a greater number of investors realize that memecoins are not investment opportunities, but speculation.
Although measures have been taken to add changes and amendments to the GENIUS Act the proverbial writing is on the wall for the development and utilization of stablecoins on a widespread basis. Be it the looming Circle IPO, the development and deployment of dollar-backed stablecoins by several TradFi institutions, or the inclusion of stablecoins into foreign policy discussions the interest and investment in stablecoins continues to accelerate. Especially when contrasted with memecoins and other more volatile cryptoassets, the appeal and benefits that are delivered from stablecoins will only become more obvious.
Stablecoins provide the benefits of tokenized payments, including cost savings for institutions and interest generation for investors, while delivering price stability. With stablecoins, in any number of forms, being integrated within TradFi institutions as well as via crypto-native organizations, the race for tokenized fiat currencies and the leadership they will help create is well underway. In short the benefits and upsides of stablecoin adoption across the financial services sector – as well as the institutional support and buy-in that stablecoins provide – will only become more obvious as memecoins force more serious discussions around cryptoassets into policy circles.
One of the most important outcomes of the political discourse that is currently underway is that the importance of legislative solutions and outcomes are being highlighted. Executive orders, mandates and actions being undertaken at the state level, and the buy-in that has accelerated among TradFi institutions have all generated significant positive sentiment and market action, but those are stop-gap measures at best. In order to establish a sustainable and positive marketplace for further crypto development legislative actions must prioritized. Unfortunately the political landscape has resulted in virtually every aspect of the crypto landscape becoming a flashpoint, but that is a necessary part of the legislative process.
The singular best outcome that can result from the discourse and political machinations underway is that comprehensive legislation moves forward. Even if this future legislation is not as unequivocally pro-crypto as some lobbyists might have initially desired, the debate, highlighting of crypto pros and cons, and rooting out unethical activities will benefit the entire sector going forward.
Memecoins continue to cause controversy, but will lead to a healthier and more sustainable cryptoasset marketplace going forward.
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