US Lawmakers Demand SEC Clarification on Crypto Airdrops

Top Republican lawmakers are seeking clarity on the United States Securities and Exchange Commission’s (SEC) stance regarding airdrops within the crypto industry.

In a letter addressed to SEC Chair Gary Gensler on Tuesday, House Financial Services Committee Chair Patrick McHenry and House Majority Whip Tom Emmer accused the financial regulator of unfairly influencing the industry. 

The lawmakers argued that the regulatory body is creating a hostile environment by making claims about airdrops in various cases and issuing warnings of potential enforcement actions.

They claimed that this approach hinders American citizens from shaping the future of the internet. Some crypto startups use airdrops to distribute free tokens to digital asset wallets, a practice that could be affected by the SEC’s actions.

Lawmakers Question SEC’s Airdrop Policies

McHenry and Emmer pointed to cases where the regulator has addressed airdrops, including its lawsuit against TRON founder Justin Sun. The SEC had previously suggested that airdrops could fall under the category of “sale or distribution of securities” in a 2019 footnote in its “Framework for ‘Investment Contract’ Analysis of Digital Assets.” The lawmakers further argued that developers have been forced to prevent Americans from taking part in airdrops because of the SEC’s stance.

By restricting American citizens from engaging in crypto airdrops, the SEC is preventing users from fully benefiting from blockchain technology, McHenry and Emmer noted. In their letter, they asked Gensler how the SEC intends to differentiate airdrops from other reward systems, such as airline miles or credit card points, and requested a response by September 30.

Push for Shared Crypto Oversight

McHenry and Emmer have previously criticized Gensler’s approach, as he insists most cryptocurrencies are securities and urges crypto platforms to register with the SEC. However, in a recent amended complaint, the regulator clarified that it views the contracts, expectations, and agreements tied to crypto sales, not the assets themselves, as securities. Meanwhile, the lawmakers have championed a crypto market structure bill that proposes dividing crypto oversight between the SEC and the Commodity Futures Trading Commission.

The letter to Gensler comes ahead of several planned House Financial Services Committee hearings, which will scrutinize the SEC’s handling of crypto.

On Wednesday, the committee will hold a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets,” with another session focused on agency oversight scheduled for next week. All five SEC commissioners are expected to testify on September 24.