Two pro-crypto lawmakers in the U.S. are urging SEC Chairman Gary Gensler to clarify the regulatory stance on airdrops. They argue that the SEC’s current approach hinders decentralization within the cryptocurrency space.
Criticism of the SEC’s Approach to Airdrops
North Carolina Congressman Patrick McHenry and Minnesota Congressman Tom Emmer stated in a letter to Gensler that the SEC is fostering a hostile regulatory environment through lawsuits concerning airdrops and increasing warnings for further enforcement actions. This regulatory atmosphere is perceived as obstructive to American citizens’ ability to shape the next phase of the internet.
“The SEC is creating a hostile regulatory environment by making accusations in various cases concerning airdrops.”
SEC’s Classification of Airdrops as Securities
The SEC has accused crypto billionaire Justin Sun and his companies of offering unregistered securities through “unregistered monthly airdrops” of BTT tokens. The lawmakers are concerned about the implications of how the SEC classifies these airdrops and have requested clarity on their connection to the Howey Test, established by the Supreme Court 90 years ago.
In their letter, they questioned whether the SEC considers free digital assets relevant to the Howey Test and under what conditions. They drew parallels with companies offering non-monetary rewards, such as airline miles or credit card points, which do not trigger the Howey Test.
“How does the SEC differentiate between free rewards and airdropped digital assets?”
The Republican lawmakers have requested a response by September 30. Their demands reflect concerns that regulatory clarity is essential to prevent stifling innovation and ensuring that American citizens can participate in emerging technologies.
