- Questions to the SEC Chair
- Examples of Cases Against Crypto Airdrops
- Consequences and Possible Changes
Two Republican lawmakers have demanded that Securities and Exchange Commission (SEC) Chair Gary Gensler answer questions about the classification of cryptocurrency airdrops by the end of the month. In a letter to Gensler dated September 17, Representatives Tom Emmer and House Financial Services Committee Chairman Patrick McHenry expressed their concerns about SEC's statements on airdrops in various lawsuits over the past two years.
Questions to the SEC Chair
Emmer and McHenry asked Gensler to answer five questions regarding crypto airdrops by September 30. Among other things, they want to know how crypto 'given away for free' falls under the Howey test and how the SEC distinguishes airdrops from other rewards like credit card points. The lawmakers are also interested in the impact on decentralized applications, economic growth, and tax revenue if airdropped tokens are classified as securities.
Examples of Cases Against Crypto Airdrops
In September 2022, the SEC sued Hydrogen Technology Corporation and its former CEO for manipulating what the SEC called 'crypto asset securities.' The firm minted over 11 billion Hydro tokens for fundraising and distributed them via airdrops, which the SEC labeled as 'unregistered offers and sales of securities.' In March 2023, the SEC sued Justin Sun and other firms, accusing them of offering and selling BitTorrent (BTT) through 'unregistered monthly airdrops to investors.'
Consequences and Possible Changes
Emmer and McHenry expressed concern that a misapplication of securities laws could prevent this technology from reaching its full decentralized potential. 'By prohibiting Americans from participating in airdrops, the SEC is preventing American crypto users from fully realizing the benefits of blockchain technology,' they wrote. This is the second time in a week that Republican lawmakers have targeted Gensler over his leadership of the agency. On September 10, several GOP lawmakers questioned Gensler over whether his political affiliation influenced hiring at the SEC.
The SEC has not yet responded to the request for comments on Emmer and McHenry's latest letter.
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