Republican congressman demands SEC chairman to explain his stance on 'token airdrops'

According to The Block, Patrick McHenry, Chairman of the House Financial Services Committee from North Carolina, and Tom Emmer, Majority Whip of the House from Minnesota, in a letter sent to SEC Chairman Gary Gensler on Tuesday, demanded a clear explanation of the SEC's stance on cryptocurrency airdrops and accused the SEC of "putting pressure on a fair balance. They wrote in the letter:

"By creating a hostile regulatory environment, including issuing statements on airdrops in various cases and increasing warnings of law enforcement actions, the SEC is exerting pressure to prevent American citizens from participating in the shaping of the next generation of the Internet."

The lawmakers cited past cases of the SEC handling airdrops, including the agency's case against Tron founder Sun Yuchen. The SEC stated in a footnote to its 2019 "Analysis Framework for Digital Asset 'Investment Contracts'" that airdrops may be considered as "sales or distributions of securities". Tom Emmer and Patrick McHenry said that developers were forced to prevent Americans from receiving cryptocurrency through air drop. Two Republicans wrote in the letter:

"By prohibiting Americans from participating in air drops, the SEC is preventing encryption users from fully experiencing the benefits of memory block chain technology."

The two asked Gary Gensler a series of questions, including how the agency distinguishes airdrops from airline miles or credit card points. They expressed their hope to receive a response from Gary Gensler before September 30th.

For many years, Tom Emmer and Patrick McHenry have criticized Gary Gensler's regulatory approach to cryptocurrency. Gary Gensler once claimed that most cryptocurrencies are securities and called for cryptocurrency platforms to register with the SEC. Meanwhile, Tom Emmer and Patrick McHenry are leading the House of Representatives in pushing for the passage of a cryptocurrency market structure bill that assigns jurisdiction over cryptocurrencies to the SEC and grants the Commodity Futures Trading Commission new jurisdiction.

The House Financial Services Committee plans to hold multiple hearings in the coming week focusing on the SEC and cryptocurrency. On Wednesday, lawmakers will hold a hearing titled "Confusion and Confusion: An Analysis of the SEC's Politicization of Digital Assets," and another hearing on SEC oversight will be held next week.