The US House of Representatives has asked the Security and Exchange Commission (SEC), under the leadership of Gary Gensler, to provide clarification on how crypto airdrops are classified.
Tom Emmer and Patrick McHenry, the two Reps who wrote the letter, expressed concerns that the SEC’s recent legal actions, which label airdrops as “unregistered securities,” could stifle blockchain innovation and hinder the growth of decentralized technologies.
“As you know, the ethos of crypto and blockchain technology is premised in decentralization,” they said in the letter. “Yet, the SEC’s regulatory approach seems to make the goal of decentralization impossible to obtain.”
They added that the SEC is making it harder for people in the U.S. to influence the future of the internet and is doing this by making strict rules, talking about problems with free token giveaways (airdrops), and warning about more enforcement actions. This creates a tough situation for people who want to get involved.
The Reps are asking that since the SEC thinks that giving away digital assets for free might still count as securities transactions if they meet certain criteria under the Howey Test, under what conditions can these be securities?
They also added that since companies reward their customers with airline miles and credit card points for free, how does the SEC differentiate between these rewards and free digital assets given away through airdrops?
The officials are also concerned about how classifying digital assets as securities might impact the market, economic growth and tax revenue. Additionally, it gave the SEC until September 30, 2024 to respond.
The 45th President of the United State doesn’t like Gary Gensler, this is what he plans to do if elected in Nov.
The U.S. Securities and Exchange Commission (SEC) has taken a proactive approach to regulating the cryptocurrency industry, focusing on ensuring compliance with existing securities laws.
Under Chair Gary Gensler, the SEC has emphasized that many cryptocurrencies and related activities, such as exchanges and airdrops, may fall under the definition of securities, thus requiring registration and adherence to regulatory standards.
One of the primary methods the SEC employs is enforcing registration requirements for cryptocurrency exchanges and tokens. This mandates that these entities comply with disclosure, reporting, and operational standards similar to traditional financial institutions. Gensler has stated that many major crypto exchanges likely trade securities and must register accordingly.
