Republican Representatives Request SEC Chair to Explain His Stance on "Token Airdrops"
House Republicans Urge SEC to Clarify Crypto Airdrop Policy
In a letter to SEC Chair Gary Gensler on Tuesday, House Financial Services Committee Chair Patrick McHenry (R-NC) and House Majority Whip Tom Emmer (R-MN) demanded clarity on the agency's stance on cryptocurrency airdrops, accusing the SEC of "tilting the scales of justice" against the industry.
The lawmakers wrote, "By creating a hostile regulatory environment, including making pronouncements about airdrops in various cases and raising enforcement actions, the SEC is pressuring individuals from participating in shaping the next generation of the internet."
Citing past SEC actions on airdrops, including the agency's case against Tron founder Justin Sun, the letter highlighted the SEC's 2019 Framework for “Investment Contract” Analysis of Digital Assets, which indicated that airdrops could be considered "the sale or distribution of securities." McHenry and Emmer argued that this had forced developers to bar Americans from receiving cryptocurrencies through airdrops.
"By prohibiting Americans from participating in airdrops, the SEC is preventing crypto users from experiencing the full benefits of blockchain technology," they wrote.
The letter posed a series of questions to Gensler, including how the agency differentiates airdrops from airline miles or credit card reward points. The lawmakers requested a response from Gensler by September 30th.
McHenry and Emmer have been critical of Gensler’s approach to regulating crypto for several years. Gensler has maintained that most cryptocurrencies are securities and has urged crypto platforms to register with the SEC. In contrast, McHenry and Emmer have spearheaded House efforts to pass a crypto market structure bill that would divide jurisdiction over cryptocurrencies between the SEC and give the Commodity Futures Trading Commission new authority.
The House Financial Services Committee plans to hold several hearings focusing on the SEC and crypto next week. On Wednesday, lawmakers will convene a hearing titled "A Tale of Confusion and Confusion: Examining the SEC’s Politicized Treatment of Digital Assets," followed by another hearing on the SEC's oversight the following week.
