Lawrence Damilola
Two Republican lawmakers are pressing Securities and Exchange Commission (SEC) Chair Gary Gensler to clarify the agency’s stance on crypto airdrops.
In a letter sent yesterday, Representatives Tom Emmer and Patrick McHenry raised concerns over the SEC’s recent actions regarding airdrops in several lawsuits. They argued that the agency’s approach may hinder American blockchain technology innovation.
In its footnote, the letter cited cases like the lawsuit against Hydrogen Technology Corporation in 2022, describing airdropped Hydro tokens as “unregistered offers and sales of securities.”
It took a similar route in March 2023 when the regulator sued Tron founder Justin Sun, accusing him of offering BitTorrent (BTT) tokens in “unregistered monthly airdrops.”
Emmer and McHenry’s letter suggests that the agency’s classification of airdrops as securities could prevent decentralization in blockchain technology. “We are concerned that a misapplication of the securities laws will prevent this technology from achieving decentralization to its full potential,” they wrote.
They are scared to death of decentralization because it restores what this country was built on, which is by the people from the ground up. pic.twitter.com/0SgLMN4IBu
— Tom Emmer (@GOPMajorityWhip) September 17, 2024
Furthermore, Emmer and McHenry requested that Gensler provide answers to five key questions about the regulator’s handling of airdrops by the end of the month. Among these was how the agency considers crypto tokens “given away for free” as falling under the Howey test, which is used to determine whether an asset is a security.
The lawmakers also inquired about how the regulator distinguishes crypto airdrops from other rewards, such as credit card points or airline miles. They emphasized the potential consequences of classifying airdrops as securities. They also asked if the SEC had conducted any assessments on the impact on economic growth, onchain applications, and tax revenue.
“By prohibiting Americans from participating in airdrops, the SEC is preventing American crypto users from fully realizing the benefits of blockchain technology,” Emmer and McHenry wrote. They further stated that this could restrict the ability of U.S. citizens to shape the next iteration of the internet.
This letter marks the second in a week in which Republican lawmakers have questioned Gensler’s leadership. In an earlier letter, McHenry and other GOP lawmakers asked whether Gensler’s political affiliation had influenced staffing decisions at the agency, particularly in filling senior roles. They accused the regulator of hiring individuals from “left-leaning organizations” in potential violation of the Civil Service Reform Act.
As of this writing, the SEC has yet to respond to the requests from Emmer and McHenry, including the questions about regulations on crypto airdrops.
Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
