What Is a Memecoin

Memecoins in the Crypto World: How Internet Trends Become Digital Assets

Memecoins—a special type of cryptocurrency—have gained popularity due to their humorous or cultural undertones. They often emerge from jokes, memes, or internet trends, yet they become significant tools within the crypto community. The popularity of memecoins can be attributed to their viral nature, high user engagement, and often affordable cost for novice investors.

Eesti Firma has specialized in supporting blockchain projects since 2017, bringing extensive experience in the field. We help clients implement crypto-related ideas, including token launches, regulatory compliance, and strategic consulting, ensuring reliable support and project success.

This article aims to delve deeper into the phenomenon of memecoins, their popularity, and their impact on the crypto-asset market. We strive to help our readers better understand this phenomenon and evaluate the opportunities memecoins can offer blockchain projects.

Meme Coins and Their Place in the Crypto World

A memecoin is a crypto asset, cryptocurrency, or token whose creation and market presence rely on a popular internet meme or trend—such as Dogecoin (DOGE), Shiba Inu (SHIB), or Pepe (PEPE). As of July 2024, the combined market capitalization of these tokens exceeds $33.7 billion, with daily trading volumes for each ranging from $154 million to $407 million.

The foundation of a memecoin lies in hype—or in other words, the wave of popularity on social media surrounding a virtual character, digital image, or event/action. Unlike established cryptocurrencies (e.g., Bitcoin or Ethereum), memecoins do not require a robust technical foundation.

Like other crypto assets, memecoins are subject to general crypto asset regulations under the EU Regulation 2023/1114 on Markets in Crypto-Assets (MiCA). There are no specific laws aimed exclusively at memecoins.

Memecoins: Simple, Fun, and Profitable

Transactions (issuance, investment, exchange trading) involving crypto assets like memecoins offer several undeniable advantages. Firstly, their affordability and low entry barrier make them attractive to newcomers eager to explore cryptocurrency investments.

Secondly, memecoins thrive on active online communities that generate content supporting the hype and trends. These communities create and share content to sustain and increase the value of the memecoin. Furthermore, leveraging hype and community involvement provides early investors with the potential for significant returns—up to 2000% or more—when a monetized meme goes viral.

Moreover, marketing in the memecoin space utilizes vibrant and entertaining campaigns, turning transactions into a form of entertainment. Finally, listing a memecoin on major exchanges increases its liquidity and simplifies its purchase and sale processes.

The Downside of Memecoins

A memecoin holds no intrinsic value. It is solely driven by hype and popularity, requiring no mining like some cryptocurrencies. This results in the extremely high volatility of this crypto asset. A memecoin’s price can skyrocket suddenly and plummet just as rapidly. The risks in memecoin markets are very high. Speculation and fraud often accompany the creation of certain memecoins, which are launched solely for the creators’ quick profit before the project is abandoned (a “rug pull” scheme). Once interest in a meme or coin fades, its value can drop sharply. Predicting which memecoin will become popular is nearly impossible.

Despite the high risks, memecoins may appeal to crypto market newcomers willing to start with small investments and those actively participating in online communities and following trendy topics. Memecoins also attract high-risk traders ready to gamble for potentially substantial returns. However, memecoins are generally unsuitable for long-term investments, resembling a game of chance for funds that investors are prepared to lose.

Regulation of Crypto Asset Markets in the EU

Current EU legislation must comply with the EU Regulation 2023/1114 on Markets in Crypto-Assets (MiCA), effective December 30, 2024. MiCA establishes uniform rules for market participants across the EU, ensuring fair competition and consumer protection.

Estonia was one of the first countries to introduce licensing for companies dealing with virtual assets. Since 2017, stringent requirements have applied to virtual asset service providers (VASP). In 2022, additional measures were introduced to enhance oversight and prevent financial crimes. Starting in 2026, cryptocurrency service providers will be fully supervised by the Financial Supervision Authority, enhancing market transparency and reliability.

Lithuania is also refining its legal framework for crypto assets. As of January 1, 2025, companies providing crypto-asset-related services must obtain a Crypto Asset Service Provider (CASP) license issued by the Bank of Lithuania. These measures aim to strengthen oversight, increase transparency, and create safer conditions for financial service users.

Although memecoins are not separately regulated, they fall under general laws designed to ensure transparency, prevent money laundering, and protect consumer rights. Investors and companies working with memecoins in the EU must comply with general crypto-asset requirements, including obtaining relevant licenses and implementing anti-money laundering measures.

The Future of Memecoins

Interest in memecoins is expected to persist, though the market is likely to shift toward more sustainable crypto initiatives. Projects like Dogecoin, Pepe, and Shiba Inu will likely remain leaders due to their strong communities and broad recognition. Meanwhile, new players will need to offer more than just hype to attract investors. Thus, memecoins continue to play a role in the evolution of the crypto asset market, balancing entertainment, risk, and innovation.

The past year has marked a turning point for the crypto asset market, with increasing interest from institutional investors and deeper blockchain integration into traditional financial sectors. Companies like BlackRock and Fidelity have significantly contributed to this process by actively adopting tokenization of real-world assets, opening new possibilities for blockchain applications in the global economy. It is anticipated that the new US government after January 20, 2025, will support the crypto industry. Initiatives such as the possible creation of a strategic Bitcoin reserve could encourage other countries to take similar steps and drive the development of the cryptocurrency ecosystem. Simultaneously, memecoins will retain their popularity, reflecting the creativity and adaptability of the crypto asset market infrastructure.

Conclusion

In conclusion, successful engagement with memecoins requires not only an understanding of their specifics but also full compliance with legal requirements, especially in jurisdictions with advanced crypto asset market regulations, such as Lithuania and Estonia. For businesses striving to adapt to new standards, professional support and competent guidance become critical success factors.

If your business plans to enter the EU crypto service market, it is crucial to prepare in advance and ensure compliance with all established norms.

Eesti Firma’s specialists are ready to offer you tailored solutions, consulting, and accounting services to help your business adapt to changes and seize new growth opportunities. Contact us to discuss how we can support your business at every stage of its development and unlock new possibilities in the world of cryptocurrencies.

Thank you!

Your enquiry was successfully recieved!
Our consultants will contact you in the nearest time.