House Republicans Call on SEC Chairman Gensler to Elaborate on Cryptocurrency Airdrops Position

Two Republican lawmakers, Representative Tom Emmer and House Financial Services Committee Chairman Patrick McHenry, have sent a letter to United States Securities and Exchange Commission (SEC) Chair Gary Gensler, demanding answers regarding the classification of crypto airdrops. The lawmakers expressed concerns about the SEC’s assertions about airdrops in recent lawsuits. They cited two specific cases as examples: the SEC’s lawsuit against Hydrogen Technology Corporation and its former CEO for market manipulation involving “crypto asset securities,” and the SEC’s lawsuit against Justin Sun and various firms for offering and selling BitTorrent (BTT) through “unregistered monthly airdrops to investors.” Emmer and McHenry are worried that a misapplication of securities laws could hinder the decentralization potential of blockchain technology. They posed five questions to Gensler, including inquiries about how airdrops fit into the Howey test and how the SEC differentiates airdrops from other rewards. They also asked about the impact on onchain applications, economic growth, and tax revenue if airdropped tokens were deemed securities, as well as if the regulator had assessed the market impact of classifying cryptocurrencies as securities. The lawmakers argued that by prohibiting Americans from participating in airdrops, the SEC is preventing them from fully benefiting from blockchain technology. This is the second time in a week that Republican lawmakers have addressed concerns about Gensler’s management of the agency. In a separate letter, they questioned whether his political affiliation has influenced hiring at the SEC, accusing the agency of filling senior roles with individuals from left-leaning organizations. The SEC has not yet responded to the lawmakers’ latest letter.