Congress Members Seek SEC Clarification on Airdrop Regulations
Two Republican Congress members are seeking clarification from the Securities and Exchange Commission (SEC) regarding the regulation of airdrops.
Representatives Tom Emmer and Patrick McHenry have addressed a letter to SEC Chair Gary Gensler, expressing concerns that current securities laws may be improperly applied to airdrops. They argue that airdrops, which involve distributing digital assets to early users of blockchain protocols, are essential for the growth of decentralized systems.
Historically, airdrops have been in a regulatory gray area. In a 2018 case involving Tomahawk Exploration’s ICO, the SEC classified even “free” tokens as securities if they contributed to a public trading market. The SEC’s stance is that airdrops, usually given to early adopters or individuals completing simple tasks, still imply a “sale” without a monetary transaction.
Attorneys have compared this situation to the SEC’s approach during the 1990s dot-com boom, where free stock offerings were scrutinized under similar principles.
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In addition, the DeFi Education Fund and Beba Collective have sued the SEC, seeking a court decision that would confirm Beba’s airdropped token is not a security. The case is ongoing, with the SEC aiming to dismiss the complaint.
In their letter, Emmer and McHenry request that the SEC clarify whether airdrops are considered securities under the Howey test and why they should be treated differently from other reward programs, such as airline miles or credit card points. They have asked for a response by September 30.
This inquiry precedes a House Financial Services Committee hearing on September 24, where SEC Commissioners will be questioned. McHenry, who chairs the committee and is not seeking re-election, and Emmer, a committee member, are leading this effort.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
