The year 2024 saw heightened scrutiny from the U.S. Securities and Exchange Commission (SEC) towards the cryptocurrency industry. Major players like Uniswap [UNI], ConsenSys, and Robinhood received Wells notices, with the SEC considering enforcement actions against NFT platform OpenSea.
Amidst the regulatory crackdown, two Republican legislators are urging SEC Chair Gary Gensler for clarification on the categorization of crypto airdrops.
Gensler on the Spot?
In a letter dated September 17th, Representative Tom Emmer and House Financial Services Committee Chairman Patrick McHenry expressed their worries, requesting Gensler to address uncertainties surrounding airdrops that have emerged in recent legal disputes.
“We are seeking clarity on the Securities and Exchange Commission’s (SEC) evaluation of digital asset distributions through ‘airdrops’.”
The letter raised concerns about the SEC’s treatment of digital asset distributions, particularly airdrops, which play a vital role in promoting engagement and nurturing the decentralization of blockchain networks.
The legislators are apprehensive that this strict regulatory atmosphere might impede the achievement of blockchain’s decentralization objectives and stifle American contributions to the evolution of internet technologies.
“Fearful of Decentralization”
Delving deeper into the issue, Emmer took to X (previously Twitter) and remarked,
“They are wary of decentralization as it reinstates the founding principles of this nation, empowering individuals from the grassroots level.”
He further stated,
“The future of the peer-to-peer digital economy should not be subject to the autocratic impulses of @GaryGensler.”
In their letter, Emmer and McHenry have given Chair Gensler a deadline until September 30th to address five critical concerns regarding crypto airdrops, including their legal status according to the Howey test and their differentiation from incentives like credit card points.
They argue that the SEC’s constraints are hindering Americans from fully leveraging blockchain technology and undercutting their influence in shaping its future, thus failing to align with American principles and interests.
Outlook for Gensler
Given Chair Gensler’s stance on cryptocurrencies, where he has expressed frustration over the disproportionate number of crypto-related inquiries compared to traditional finance, mentioning,
“Crypto constitutes a small portion of our market. However, it disproportionately contributes to scams, frauds, and market issues.”
It remains to be seen how Gensler will tackle these queries and whether he will continue guiding the SEC into 2025.