Top Republican lawmakers are pushing US Securities and Exchange Commission (SEC) Chairman Gary Gensler for clear guidelines on the treatment of crypto airdrops.
In a recent letter, House Financial Services Committee Chairman Patrick McHenry (R-NC) and House Majority Whip Tom Emmer (R-MN) criticized the way the SEC is handling the crypto space, specifically targeting its method in airdrops, a common method of distribution that uses Start of blockchain.
The letter comes as more projects seek to avoid launching aircraft to American citizens amid regulatory uncertainty.
SEC actions are hurting crypto innovation
Lawmakers say the SEC’s actions create an unfavorable regulatory environment for crypto innovation.
“By creating a hostile regulatory environment, including withdrawal notices at various times and adding recommendations for additional enforcement measures, the SEC is forcing its reach and preventing American citizens from.” form the next iteration of the Internet,” McHenry and Emery said. he wrote in a letter to Gensler.
Airdrops are a popular way to distribute free tokens to holders of digital asset wallets, but the SEC has previously indicated that they can be treated as securities.
The agency highlighted this position in its 2019 “Framework for Reviewing ‘Investment Contracts’ for Digital Assets,” which suggests that airdrops can be classified as sales or distributions of securities.
Lawmakers pointed to the SEC’s lawsuit against Tron founder Justin Sun as an example of its aggressive stance on airdrops.
McHenry and Emery expressed concern that the SEC process has led some crypto projects to prevent US users from participating in airdrops.
They argued that this understates the potential benefits of blockchain technology for Americans.
“By prohibiting Americans from participating in airdrops, the SEC is preventing crypto users from fully realizing the benefits of blockchain technology,” they wrote.
Lawmakers asked Gensler to explain how the SEC distinguishes airdrops from similar offers such as airline miles or credit card points.
They set a September 30 deadline to respond. The SEC has not commented on the letter.
McHenry and Emery have long criticized Gensler’s approach to crypto regulation, accusing him of overreaching.
Gensler says more cryptocurrencies should be classified as securities and calls for crypto platforms to register with the SEC.
The upcoming SEC status hearing
The letter coincides with an upcoming hearing before the House Financial Services Committee, where the SEC’s stance on digital assets will be a major focus.
A hearing titled “Confused and Confused: Dismantling the Weak Electoral Commission’s Politicized Approach to Digital Assets” is scheduled for Wednesday, with another administrative hearing scheduled for next week, where commissioners all five SEC members are expected to testify.
Prominent legal figures in the cryptocurrency industry, such as Ripple’s Stuart Alderott and Coinbase’s Paul Grewal, have similarly criticized the SEC for crypto-related lawsuits.
Alderotti described the SEC’s position on “crypto-asset securities” as complicated and inconsistent, while Grewal expressed conflict with the regulator’s arguments, particularly in its case against Ripple, which involves XRP.
Recently, a coalition of seven US states came together to challenge the SEC’s cryptocurrency regulation.