US lawmakers demand the SEC explain its approach to regulating airdrops

What’s new? Republican members of the US House of Representatives have called on Securities and Exchange Commission (SEC) Chairman Gary Gensler to clarify the position on cryptocurrency airdrops. The officials also criticized the SEC’s regulatory approach, which prevents US citizens from participating in free digital asset giveaways from crypto projects.

Source: X.com

What else is known?

“By creating a hostile regulatory environment, including making assertions about airdrops in various cases and increasing warnings for additional enforcement actions, the SEC is putting its thumb on the scale and precluding American citizens from shaping the next iteration of the internet,” wrote Congressmen Patrick McHenry and Tom Emmer.

The lawmakers recalled that in a 2019 report, the SEC stated that airdrop could be considered a sale or distribution of securities. The status of the free cryptocurrency distribution event was also one of the subjects of the SEC’s case against TRON blockchain founder Justin Sun.

McHenry and Emmer note that as a result of the SEC’s hostile action, cryptocurrency developers have been forced to block access to participation in airdrops for Americans:

“By prohibiting Americans from participating in airdrops, the SEC is preventing crypto users from fully realizing the benefits of blockchain technology.”

In their letter, officials asked Gensler several questions, including how the commission plans to distinguish airdrops from airline miles or reward points awarded to credit card users. They expect to have an answer by September 30.

“The future of the peer-to-peer digital economy cannot be left to the authoritarian whims of Gary Gensler,” Emmer concluded.

McHenry and Emmer have criticized Gensler over the years for his approach to regulating cryptocurrencies; they also led the effort to pass House Bill FIT21, which divides oversight authority over the sector between the SEC and the Commodity Futures Trading Commission (CFTC).

The House Financial Services Committee, led by McHenry, plans to hold several hearings over the next week to highlight the SEC’s activities in the crypto sector.

On September 18, lawmakers will hold a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets,” and another the following week, also focused on the agency’s oversight. All five SEC commissioners will also attend the September 24 hearing.