Adjunct professor at Columbia Business School, Omid Malekan, believes a Donald Trump win in the US presidential election could be bearish for memecoins.
In a post on X, Malekan noted that a Trump win and Republican sweep in November could bring regulatory clarity to the crypto industry in the US.
According to him, this regulatory clarity could be bad for memecoins because it will return attention to decentralized applications (dAPP) and native tokens (altcoins) with clear value propositions.
He said:
“Regulatory sanity in America is bad for memecoins because it refocuses crypto on dApps and other things that actually matter, leading to a prolonged bear market where most people lose money on them.”
In Malekan’s view, memecoins are the retail investors’ way of opposing the unfair tokenomics of venture capital-backed crypto projects that issue the majority of tokens to insiders. He noted that the restrictive policies of Gary Gensler’s Security Exchange Commission (SEC) and Biden’s administration made VC-backed projects popular.
If Trump wins and Republicans secure a majority in Congress, it is likely that these policies will be removed, bringing back earlier crypto concepts such as initial coin offerings (ICOs) and airdrops that everyone benefits from. When those become the order of the day and crypto investors see a way to directly benefit from investing in valuable crypto projects, he expects interest in memecoins to fade.
Industry experts disagree on what memecoins represent
Malekan’s comments have started a debate within the crypto community on X, with many disagreeing with his take.
The Block co-founder Mike Dudas noted that memecoins have no purpose. Thus, several other categories exist even as some invest in them as a statement against unfairness.
Dudas added that the unique selling point of memecoins is speculation and fun, which will always be popular regardless of who is in office. The crypto entrepreneur also noted that regulation changes might even lead to ICOs for memecoins.
Galaxy head of research Alex Thorn also shared his view on the subject, noting that memecoins simply represent the acceptance of crypto failure to deliver value through use cases and despair about economic realities.
He said:
“Memecoins are an expression of economic hopelessness and widespread malaise/acceptance about crypto’s failure to deliver.”
Meanwhile, memecoin investor Murad Mahmudov added that most memecoin investors do not care about politics. According to him, the socioeconomic factors driving memecoin growth are far beyond what a single election can change, and most people trade memecoins because of the potential for exponential returns.
Murad said:
“The rise of Memecoins has more do to with the persistently rising Global Money Supply. Will that stop under Trump? Nope. Memecoin buyers don’t even care about buying things with legit revenues.”
Still, some stakeholders agreed with Malekan. These include Venture Capitalist Nic Carter and BlockTower Capital founder Ari Paul. Paul noted that once regulations allow retail investors to invest in altcoins with fundamental value, attention will shift back to speculating on altcoins instead of memecoins.
Memecoin investors ‘do not care about altcoins’
Meanwhile, others believe that Malekan’s argument actually supports memecoins and shows why it will always be in vogue. They noted that the majority of altcoins do not generate any profit, and their utilities are theoretical, so there is no way they will generate dividends for holders.
“The reality is that 99% of altcoins don’t generate profits, and their so-called ‘utilities’ go largely unused. They won’t give any dividends because they don’t make any money.”
Thus, most altcoins’ failure to deliver real returns might make more people shift towards memecoins because they are simple.
Murad shares a similar view, noting that turning on fee switches will only make altcoins feel like securities, and no one comes to crypto to trade equities.
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