Two lawmakers in the United States have raised concerns about the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler’s stance on airdrops in the crypto space. Representatives Patrick McHenry and Tom Emmer argue that the SEC’s regulatory approach is hindering decentralization in the cryptocurrency industry.
In a letter addressed to Gensler, the lawmakers expressed their worries about the SEC’s actions against crypto mogul Justin Sun, the Tron Foundation, BitTorrent Foundation, and Rainberry Inc. The SEC filed a lawsuit in 2023, accusing the defendants of offering unregistered crypto securities, specifically TRX and BitTorrent (BTT), through monthly airdrops to investors.
The legislators are seeking clarification from Gensler on how airdrops align with the Howey Test, a legal assessment used to determine if assets should be classified as securities. They questioned whether giving away non-security digital assets for free implicates the Howey Test and how the SEC distinguishes between these rewards and digital assets airdropped to individuals.
Emmer and McHenry highlighted that companies often offer rewards to customers in the form of intangible representations of value, such as airline miles or credit card points, without triggering the Howey Test. They argued that airdrops serve a similar purpose of engaging users and developers in the growth and decentralization of blockchain networks.
The lawmakers have requested a response from Gensler by September 30th to address these concerns and provide clarity on the SEC’s position regarding airdrops and their classification under securities laws.
In conclusion, the debate around airdrops and their regulatory implications continues to be a point of contention within the crypto community. As the SEC navigates this complex landscape, it is essential for clear guidelines to be established to foster innovation while ensuring investor protection in the evolving digital asset space.