Bitwise Asset Management and the Hyperliquid Policy Center have submitted comment letters to the US Securities and Exchange Commission (SEC) urging revisions to its proposed Regulation Crypto Assets. The submissions, filed on October 19, seek clearer guidance on token classifications, airdrops, and secondary-market trading as the public comment period closes on Tuesday. Bitwise argued that investment managers require a standard based on "publicly available information" to determine if crypto assets are subject to securities laws. The firm also requested clarification on relying on issuers' Form TR filings, which certify that an investment contract has ceased to exist.
The Hyperliquid Policy Center called for broadening the proposed safe harbor, warning it might arrive too late in a project's development. The group sought protections for airdrops rewarding network participation and guidance on token buybacks. Additionally, Hyperliquid highlighted regulatory uncertainty regarding unregistered intermediaries facilitating token trading or tokens trading through onchain protocols, urging the SEC to address secondary-market transactions directly.
In contrast, former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners submitted a letter on October 16 recommending the withdrawal of the proposal entirely. They argued the rules exceed the agency’s statutory authority and weaken investor protections by allowing self-certification to remove tokens from securities oversight. They contended that existing laws and the Howey test provide sufficient frameworks. The SEC will now review these submissions before deciding whether to revise, adopt, or withdraw the rules, with no timetable announced for a final decision.
The divergent responses to the SEC's Regulation Crypto Assets highlight a fundamental tension between industry demands for operational clarity and legal challenges to the agency's authority. Bitwise and Hyperliquid focus on practical implementation gaps, particularly regarding how managers assess asset status and how decentralized venues operate without explicit safe harbors. Their requests suggest that current proposals may not adequately resolve the ambiguity surrounding token lifecycle events like airdrops and buybacks, potentially leaving compliant firms exposed to enforcement risks despite good-faith efforts.
Conversely, the call for withdrawal by Stark and Reiners underscores significant jurisdictional fragility. If the SEC proceeds with rules that critics argue rely on unauthorized self-certification mechanisms, any final adoption could face immediate litigation. This creates a scenario where even favorable regulatory outcomes might be legally unstable, forcing market participants to navigate a landscape where compliance standards could shift abruptly due to court interventions rather than administrative refinement.
