According to Blockworks, two Republican Congressional Representatives are seeking clarity from the Securities and Exchange Commission (SEC) regarding the regulatory stance on airdrops. Representatives Tom Emmer and Patrick McHenry sent a letter to SEC Chair Gary Gensler, expressing concerns that the SEC has potentially misapplied securities laws to airdrops. They argue that airdrops are crucial for the development of decentralized blockchain systems. Airdrops, defined as digital assets distributed to early users of certain protocols, have been in a regulatory gray area for years.
In a 2018 enforcement action against Tomahawk Exploration’s initial coin offering (ICO), the SEC claimed that even tokens distributed for free, such as airdrops, are considered securities because they create a public trading market. The SEC noted that airdrops are typically given to early community members or individuals who perform tasks like downloading an app or promoting a project. Despite the lack of monetary transfer, the SEC argued that these tokens still constitute a sale. This stance is similar to the SEC’s position during the dot-com era when