Disclosure: The views and opinions expressed right here belong solely to the creator and don’t symbolize the views and opinions of crypto.information’ editorial.
On the heels of July 4th celebrations, final Friday, July 18, President Donald Trump signed the GENIUS Act into legislation, making it the primary federal legislation to manage stablecoins. Accredited by Congress on Thursday, July 17, the invoice’s passage noticed the digital asset trade belongings surge previous a $4 trillion market capitalization for the primary time.
Abstract
- The GENIUS Act marks a turning level, turning into the primary U.S. federal legislation to manage stablecoins and boosting crypto’s market.
- Trump is leaning into the crypto highlight, issuing his personal stablecoin, NFTs, and memecoin, positioning himself because the “Crypto President.”
- NFTs and memecoins are essentially totally different: NFTs are distinctive, nonfungible belongings tied to possession, whereas memecoins are fungible, viral tokens pushed by hype.
- Regulatory and tax remedy varies extensively, with the SEC treating many memecoins as collectibles and the IRS making use of as much as a 28% tax on NFTs deemed collectibles.
- Knowledgeable consensus: purchaser beware — memecoins can resemble playing, whereas NFTs present extra promise in gaming, artwork, and id, however each demand cautious vetting.
The GENIUS Act imposes federal and state oversight on stablecoins—digital belongings backed by the U.S. greenback—reworking realms of finance endlessly and making President Trump the de facto crypto president of our Nation.
Flag – Rose by Selva Ozelli, USA 250 sequence
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President Donald Trump’s World Liberty Monetary platform has a mission to “make crypto and America nice” and has issued a stablecoin USD1. Moreover, previous to taking workplace for his second time period, President Trump issued nonfungible tokens known as “Trump Digital Buying and selling Playing cards” in addition to Official Trump (TRUMP) memecoin. Whereas stablecoins are regulated by federal legislation, NFTs and memecoins are nonetheless in want of regulatory readability from the US Securities and Change Fee.
How can an investor distinguish between an NFT and a memecoin earlier than investing, and are these good digital asset investments? I requested a number of the trade consultants for sensible steering on these questions for my readers’ profit.
How you can differentiate between NFTs and memecoins
Typically talking, NFTs are distinctive digital belongings saved on a blockchain, representing possession of a selected merchandise, digital or bodily. Not like fungible digital belongings, that are interchangeable, every NFT is distinct and can’t be changed by one other. A memecoin, then again, is a kind of digital asset that’s sometimes created as a joke or parody of an web meme, development, or humorous idea. Whereas memecoins share the underlying blockchain expertise with different digital belongings reminiscent of Bitcoin (BTC), Ethereum (ETH), Avalanche (AVAX), NFTs, and stablecoins, they usually lack a critical monetary or technological objective.
Kristen Mierzwa, Head of Digital Belongings at FTSE Russell, additional explains to me in an interview the distinctions between NFTs and memecoins: “FTSE Russell has been pricing and calculating indices on digital belongings since 2019. Our objective is to cowl the investible crypto markets, which embrace stablecoins together with memecoins, however don’t embrace NFTs. We’re figuring out digital belongings which might be listed on centralized exchanges per our guidelines within the ‘Information to the Vetting of Digital Belongings and Digital Asset Exchanges,’ or Vetting Information. As all the time, we’re taking a rules-based method to this asset class. For extra data on how we choose which belongings are included in our FTSE Digital Asset Universe, which is rebalanced quarterly, please seek advice from our Information to Protection.
The best method for anybody to determine if a digital asset is a memecoin or an NFT is to see if the asset has a token image. An instance could be Dogecoin (DOGE) with an emblem, whereas an NFT doesn’t have a token image. One other nice identifier you may search for is that if the digital asset is bought in fractional items like 0.0001, which might be a memecoin quote. If you happen to see a picture with a singular ID like #221 of a set, it’s probably an NFT.
Now let’s take into consideration the attributes related to a memecoin versus an NFT. We classify memecoins within the FTSE Grayscale’s Crypto Sector Index Collection within the Shopper & Tradition sector. The reason being to seize the social developments linked to the utilization of memecoins. Fairly merely, many customers are having enjoyable buying and selling a majority of these belongings like Fartcoin (FARTCOIN). The valuation of memecoins in our universe is predicated on the executed trades on centralized exchanges. We then mixture these costs each 15 seconds and type a Quantity Weighted Common Value. Examples of NFTs that many individuals are aware of are the Bored Ape Yacht Membership NFTs. These are thought-about collectibles and, like several one-of-a-kind piece of artwork, there is no such thing as a simple methodology to valuation. It may very well be the latest gross sales historical past, an analysis of uncommon traits, celeb affect, liquidity, and market sentiment, to call a number of.”
From a regulatory perspective, the SEC employees views typical memecoins as collectibles and has not supplied clear, formal steering on whether or not NFTs are securities, however has as a substitute pursued enforcement actions, generally citing resale royalties as proof that an NFT is a safety. Due to this fact, traders want to research memecoins and NFTs on a case-by-case foundation, specializing in whether or not the NFT is getting used as an funding contract slightly than a collectible or digital asset, with the differentiation remaining advanced and topic to additional interpretation and particular person assessments primarily based on the tokenomics, particular traits, and advertising of every token.
Shane Molidor, CEO and founding father of Forgd, a platform and advisory agency specializing in supporting blockchain initiatives, defined to me: “Memecoins are sometimes fungible tokens, with many memecoins launched with ‘no utility’ disclaimers. The SEC’s Division of Company Finance considers most memecoins to be akin to collectibles slightly than securities below federal legislation, however can nonetheless view them as securities below the Howey Check, particularly if the tokenomics enable coordinated promotion, insider allocations, or implied revenue expectation.
NFTs, then again, are nonfungible and infrequently symbolize digital artwork, collectibles, or in-game gadgets. From a regulatory standpoint, NFTs are much less more likely to be thought-about securities except they’re fractionalized or marketed with an expectation of earnings tied to the work of others.”
Are NFTs and memecoins good investments?
Kristen Mierzwa of FTSE Russell—which is a worldwide index supplier, subsidiary of the London Inventory Change Group, that creates and manages a variety of economic market indices; they’re identified for his or her FTSE and Russell index sequence, that are utilized by traders worldwide for benchmarking, funding methods, and creating monetary merchandise—mentioned to me: “As an index supplier that invests in memecoins however not NFTs, we follow speaking in regards to the reported historic numbers and don’t make predictions in regards to the future. It’s clear that memecoins are trending up available in the market capitalization in our investible universe. FTSE Russell doesn’t make suggestions on whether or not memecoins belong in an index; we merely cowl the information in order that our shoppers can determine what the suitable benchmark is for his or her funding goal.”
Supply: FTSE Russell. As of March 31, 2025. Please word that the lacking fields are because of non-memecoin market caps not being verified within the historic information. Please word that in December 2022, FTSE Russel lined 363 belongings slightly than 400
William Quigley, a cryptocurrency and blockchain investor and co-founder of WAX and Tether (USDT), defined to me: “I count on 2025 to be a meme coin market excessive 12 months parallel to the digital asset bull run akin to when the NFT market exploded throughout the first a part of 2021.”
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As Shane Molidor, CEO and founding father of Forgd, defined: “Memecoins may be useful instruments for influencers—sometimes, influencers’ earnings are decided by the quantity of consideration they get, and the way properly they will monetize it by way of advertisements. The issue for influencers is that social media platforms act as gatekeepers—they decide who will get ‘screentime,’ and consequently, how a lot cash creators could make off of advertisements.
Creators, to some extent, bypass this by creating various income streams like merchandise, and many others., however memecoins are actually the purest instantiation of the eye economic system. As a substitute of an consideration economic system on the behest of some shadowy tremendous coders who decide your ‘rank’ in a black-box algorithm, memecoins put creators’ destiny within the arms of the free market—the cash they make is proportionate to the eyeballs they’re capable of get on their token, and that’s it. An extra benefit of memecoins is that utility may be embedded in that token too, so as a substitute of merely being an consideration token, a musician may, as an illustration challenge a token that offers followers a monetary stake within the artist’s success, function loyalty token, or can be utilized for unique content material, merch, or entry, and many others.
That mentioned, memecoin markets largely perform like playing, and are extraordinarily unsustainable at this time. Playing, at face worth, is the truth is sustainable—the trade is value over $1 trillion, and with monetary nihilism on the rise (as folks discover themselves more and more financially determined), the trade is just getting bigger. The rising recognition of memecoins is a symptom of this phenomenon as properly.
Nevertheless, in contrast to legacy playing (reminiscent of casinos), the sport idea behind memecoins doesn’t lend itself properly to sustainability. Pose this: you’re the proprietor of a on line casino. You personal all of the slot machines and poker tables within the on line casino. The very last thing you wish to do is for everybody to lose cash. You’ve gotten an optimum technique whereby some folks generate income, and a few folks lose cash, nevertheless it’s structured such that it’s not fully extractive. Because you personal every thing within the on line casino, you’re wonderful shedding cash on some video games to generate income off of others. However with memecoins, that couldn’t be farther from the reality. Each memecoin creator has each incentive to extract maximally; they aren’t anxious about clients returning to their on line casino. This creates a variety of churn and extractive conduct, which is what we see at this time.”
Sergio Hamza, the Founder and CEO of Coincu, which got here out with a digital asset danger report, agrees with all knowledgeable feedback, including: “U.S. President Donald Trump’s memecoin mania and Argentine President Javier Milei’s public blunder have spotlighted how wild and unpredictable the memecoin market may be. Trump’s memecoin raked in hundreds of thousands, crashed spectacularly, and handed the European Central Financial institution new ammunition to wish to tighten MiCA’s grip even additional right into a European crypto standstill. On the similar time, Milei’s memecoin try fizzled, fueling extra ‘I informed you so’ from world regulators. However behind the chaos, there’s an actual probability for memecoins to develop up. With agentic monetary automation and unbiased AI instruments, we may see memecoins evolve from pure hypothesis right into a basis for digital monetary independence.”
Lukas Enzersdorfer-Konrad, Deputy CEO of Bitpanda, factors out: “We’re seeing a transparent shift in momentum throughout the crypto market, with sturdy capital rotation away from Bitcoin and into altcoins. Ethereum, XRP (XRP), Solana (SOL), and even meme cash like Dogecoin are considerably outperforming BTC over the previous week, displaying that traders are more and more keen to maneuver additional out on the chance curve. Whether or not this marks the beginning of a sustained altcoin [memecoin/NFT] season stays to be seen, however the present rally reveals simply how shortly sentiment can flip as soon as confidence and liquidity are in place. The broad ecosystem is clearly wholesome, and there may be extra for traders to discover than simply BTC and ETH.”
John Crain, co-founder and CEO of SuperRare NFT platform with a brand new NYC-based bodily artwork gallery known as Digital Decadence, says, “SuperRare offers particularly in artwork NFTs— whereas NFTs are a much wider digital asset class than merely digital artwork or collectibles. Whereas initially gaining prominence within the artwork world, NFTs’ use has expanded throughout quite a few industries and purposes, together with however not restricted to gaming, actual property, music and leisure, provide chain administration, digital id and credentials, occasion ticketing, mental property and royalties, phygitals, literature, and digital publishing. I feel we’re going to see gradual, regular institutional adoption of the NFT digital asset class, making them good investments.”
I beforehand lined a few of these matters. Learn additional on the music trade, actual property, and digital id, for instance.
US taxation of memecoins, NFTs, and collectibles
In the US, digital belongings, which embrace stablecoins, memecoins, NFTs, and collectibles, are taxed as property. Once you promote or change digital belongings, you could incur capital positive factors or losses, that are topic to taxation. The tax charge depends upon whether or not the positive factors are short-term (held for one 12 months or much less), long-term (held for a couple of 12 months), or collectibles.
Underneath March 2023 IRS steering, sure NFTs could also be categorised as collectibles—subjecting them to the next capital positive factors tax charge of as much as 28%, in comparison with the usual 15–20% for different crypto belongings (per IRS Discover 2023-27). The excellence of a digital asset between an NFT and a memecoin could also be significantly vital as a result of taxation of collectibles. For instance, an investor may assume that President Trump’s NFTs and memecoins are each collectibles. However traders have to make the willpower below the tax guidelines and never what they assume or what the SEC says.
Moreover, traders are urged to think about the cross-border tax implications of such digital asset investments as properly. Some nations impose a federal degree and VAT (that means gross sales tax) on such investments, and a few tax treaties impose double tax on capital positive factors.
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