Two Republican lawmakers are pressing U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler to clarify the agency’s stance on crypto airdrops. Representatives Tom Emmer and Patrick McHenry sent a letter on Sept. 17, expressing concerns about the SEC’s classification of airdrops, citing recent legal actions involving the practice.
In 2022, the SEC sued Hydrogen Technology Corporation for market manipulation through the distribution of over 11 billion Hydro tokens via airdrops, calling it an unregistered securities offering. In 2023, the SEC sued Justin Sun and other firms for unregistered airdrops of BitTorrent tokens (BTT).
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
Emmer and McHenry argue that misinterpreting securities laws could hinder blockchain technology’s potential for decentralisation. They have asked Gensler to address five questions by the end of September, including how airdrops, often given for free, align with the Howey test used to define securities. They also inquired about the broader economic impacts if airdropped tokens are classified as securities.
The lawmakers criticised the SEC’s approach, saying it restricts U.S. citizens from benefiting from blockchain innovations and risks allowing other countries to lead the development of new internet technologies.
This letter marks the second time in a week that GOP lawmakers have challenged Gensler. Earlier, on Sept. 10, some Republicans questioned whether his political leanings influenced SEC hiring decisions, accusing the agency of prioritising left-leaning candidates for senior roles. The SEC has not yet responded to the recent letter.
