SEC Chairman Gary Gensler is facing pressure from U.S. Reps. Tom Emmer and Patrick McHenry to answer questions about the agency’s handling of cryptocurrency airdrops. Gensler has until September 30 to respond.
SEC’s Controversial Position on Airdrops
Emma and McHenry expressed their concerns in a letter dated September 17. They are concerned about the SEC’s recent actions on airdrops. The SEC has taken legal action in several cases, and the lawmakers believe this could stifle innovation.
In 2022, the SEC filed suit. Hydrogen Technology Co., Ltd. And the former CEO. The SEC accused them of manipulating the market with Hydro tokens distributed through airdrops. The SEC deemed these airdrops as an “unregistered offer and sale of securities.”
Then, in March 2023, the SEC targeted Justin Sun and other companies for allegedly offering BitTorrent (BTT) through unregistered monthly airdrops. Emmer and McHenry highlighted these cases as examples of the SEC’s coercive approach.
“We are concerned that misapplication of securities laws could prevent this technology from reaching its full potential,” they wrote.
Questions for Chairman Gary
Lawmakers outlined five key questions they want Gary to answer by the end of the month. They want to know. Explains how free cryptocurrency airdrops apply to the Howey test and how the SEC distinguishes them from other types of rewards, such as credit card reward points.
They are also interested in the potential impact on blockchain applications, economic growth, and tax revenues if airdrop tokens are deemed securities. They also want to know if the SEC has assessed the broader market implications of classifying cryptocurrencies as securities.
“By banning airdrops, the SEC is preventing Americans from fully benefiting from blockchain technology,” Emmer and McHenry said. They believe this approach could exclude American values from shaping the future of the internet.
Political scrutiny of Gensler
This demand for clarity is the latest in a series of challenges to Gensler’s leadership. On September 10, several GOP lawmakers, including McHenry, questioned whether Gary’s political affiliations influenced SEC hiring decisions. They argued that the SEC could hire individuals from left-leaning organizations, which could undermine the agency’s impartiality.
The SEC has not yet responded to Emmer and McHenry’s latest request.
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