Republican Lawmakers Demand SEC Clarify Stance On Crypto Airdrops, Warn Of Missed Opportunities For Americans

Updated: 18 September 2024

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Republican lawmakers are pressing the US Securities and Exchange Commission (SEC) to clarify its stance on crypto airdrops by the end of the month, arguing that regulatory uncertainty is stifling innovation.

House Financial Services Committee Chairman Patrick McHenry and Representative Tom Emmer expressed concerns over SEC Chair Gary Gensler’s approach to crypto airdrops in a Sept. 17 letter.

“The SEC is putting its thumb on the scale and preventing American citizens from shaping the next iteration of the internet,” they wrote.

SEC Has Targeted Firms That Execute Airdrops

The SEC has a track record of targeting crypto firms involved in airdrops, including a 2022 lawsuit against Hydrogen Technology Corporation and its former CEO for allegedly distributing unregistered securities through an airdrop. This was after the firm minted 11 billion Hydro tokens as part of a fundraising initiative.

These past enforcement actions have added urgency to the lawmakers’ demand for clarity.

Tron founder Justin Sun and other crypto firms were also sued by the regulator in March 2023, and allegedly offered and sold BitTorrent (BTT) in “unregistered monthly airdrops to investors.”

Both of these cases were mentioned in the footnote of the letter addressed to Gensler.

Americans Could Miss Out On The Next Iteration Of The Internet

Emmer and McHenry said that by “prohibiting Americans from participating in airdrops,” the SEC is preventing American crypto users from realizing the full potential of blockchain technology.

The SEC’s approach under Gensler’s leadership “has only ensured that the next iteration of the internet is not designed by Americans or with American values,” the letter said.

They are scared to death of decentralization because it restores what this country was built on, which is by the people from the ground up. pic.twitter.com/0SgLMN4IBu

— Tom Emmer (@GOPMajorityWhip) September 17, 2024

Emmer also said in a Sept. 17 X post that the SEC and anti-crypto politicians such as Elizabeth Warren are “scared to death of decentralization,” because it restores American citizens’ power to build the nation “from the ground up.”