Republican lawmakers are seeking more information from the SEC on how it addresses crypto airdrops. The House Committee on Financial Services chairman Patrick McHenry and the Majority Whip Tom Emmer have requested SEC Chairman Gary Gensler to clarify how the agency regards airdrops.
They voiced their concerns regarding the current approach of the SEC and its effects on the development of blockchain technologies within the United States.
Lawmakers Seek Clarification on Airdrops
McHenry and Emmer are concerned about the way that SEC has been handling airdrops. It entails free token distribution in the blockchain systems. They claim that the SEC could be wrongly applying securities laws to these distributions, thus making it hard for developers.
The legislators argued that classifying airdrops as securities hinders the advancement and development of blockchain technology. They are also worried that US developers have been prevented from allowing Americans to participate in airdrops.
This takes away from the advantages of the decentralized blockchain systems to U.S. citizens. To this effect, the lawmakers are calling on the SEC to come out clearly on whether or not airdrops should be assumed to be securities.
Request on Comparison with Rewards Programs
In the letter, McHenry and Emmer want to know how the SEC will distinguish airdrops from other reward programs. They equate crypto airdrops to airline miles and credit card points, where rewards are earned without having to spend any funds.
The legislators have raised the issue of why airdrops should be subjected to different regulations if both systems serve the same purpose and functions. They also described SEC enforcement actions that have taken place in the past like the one against Justin Sun of Tron, where the SEC categorized airdrops as securities.
McHenry and Emmer want the SEC to make it easier to understand whether an airdrop constitutes an investment under the Howey Test. They argue that the present legal situation deters blockchain developers from working in the United States.
Concerns About Economic Impact
The lawmakers also want a study on the effects of the market that come with regulating airdrops as securities. They want to know if SEC had taken into account economic impacts such as reduced tax revenues, and slow pace of technological advancement.
McHenry and Emmer noted that SEC’s current approach may damage United States’ potential to become a leader in the blockchain industry. The letter precedes a series of hearings in the House Financial Services Committee. The committee dedicated to the analysis of the SEC’s policy on digital assets.
Such hearings are likely to assess the possible effects of the SEC’s regulatory actions on blockchain and the cryptocurrency markets.
Legislative Push for Crypto Regulation
McHenry and Emmer have opposed Gensler’s leadership on the regulation of the crypto industry for quite some time. Accordingly to them, such conduct by the SEC only creates confusion in the marketplace.
Under the proposed bill, both the SEC and the Commodity Futures Trading Commission will share the responsibilities of the regulations. They believe it will result in a better and more fair balance of rules by the regulatory authorities.
The upcoming hearing on September 24 by the SEC on the oversight of various firms will indeed be crucial. The Republican run Congress is also planning to interrogate all five SEC commissioners. McHenry and Emmer want clear answers by September 30 to help make sure the U.S. stays competitive in blockchain technology.
