In a recent communication dated September 2024, House Majority Whip Tom Emmer and House Financial Services Committee Chairman Patrick McHenry voiced apprehensions regarding the Securities and Exchange Commission’s (SEC) treatment of airdrops as securities. The lawmakers expressed concerns to SEC Chair Gary Gensler, challenging the agency’s position on airdrops.
The correspondence emphasizes the significance of airdrops in the blockchain realm, defining them as distributions of digital assets to early adopters of a blockchain protocol. Emmer and McHenry stressed that crypto airdrops are pivotal for nurturing a decentralized blockchain ecosystem.
According to the lawmakers, airdrops serve as incentives for engaging with blockchain applications, fostering network decentralization and governance. The letter criticized the SEC, led by Gary Gensler, for impeding blockchain advancement by instigating an unfavorable regulatory atmosphere.
Emmer and McHenry contended that the SEC’s actions are hindering the attainment of decentralization goals and constraining the technology’s full potential. They accused the SEC of bias by intervening with enforcement actions and warnings that obstruct U.S. citizens from participating in the evolution of the internet.
The lawmakers posed a series of direct inquiries to Gary Gensler, seeking clarification on the SEC’s interpretation of securities law concerning airdrops. Notably, they questioned whether giving away digital assets for free could trigger the application of the Howey Test, a benchmark for identifying investment contracts under U.S. law.
Additionally, the letter compared crypto asset airdrops to conventional consumer rewards like airline miles or credit card points, pointing out distinctions in regulatory treatment. Emmer and McHenry also highlighted the potential repercussions of classifying digital tokens as securities on the broader blockchain ecosystem, expressing concerns about its impact on on-chain applications.
Emmer and McHenry requested Gensler to provide responses by September 30, 2024, amidst preparations for a forthcoming congressional hearing on political bias in crypto regulation.