Key Takeaways
- • Bitwise Asset Management and the Hyperliquid Policy Center filed separate October 19 submissions urging the SEC to revise its proposed Regulation Crypto Assets, with the comment period closing October 20, 2026.
- • Bitwise proposed that managers rely on an issuer's Form TR, a filing certifying an investment contract has ceased to exist, provided the SEC does not challenge it within a review period, and that issuers publish supporting analysis.
- • Hyperliquid Policy Center argued that mandatory public analysis could expose developers to litigation and proposed certification without publication, or confidential submission to SEC staff.
- • Former SEC enforcement official John Reed Stark and Duke University scholar Lee Reiners called for the proposal's withdrawal, arguing the SEC lacks statutory authority for the proposed exemptions.
- • The proposed $5 million and $75 million registration exemptions and conditional safe harbor are not in force, and the SEC has not announced a timetable for a final rule.
Summary
Bitwise Asset Management and the Hyperliquid Policy Center have urged the US Securities and Exchange Commission to revise its proposed cryptocurrency rules, exposing disagreements over token classification, issuer disclosures and secondary-market trading as the public comment period closed on October 20. In separate submissions dated October 19, both organizations supported greater regulatory certainty but proposed different approaches to determining when tokens are no longer associated with securities investment contracts.
The SEC's Regulation Crypto Assets, proposed in August, would establish two registration exemptions: up to $5 million in fundraising over four years and up to $75 million within any 12-month period. It would also introduce a conditional safe harbor allowing qualifying investment contracts associated with crypto assets to cease being treated as securities.
Bitwise argued that asset managers need objective standards for determining whether cryptocurrencies can be included in investment products without creating excessive securities-law exposure. The firm proposed allowing managers to rely on an issuer's Form TR, a proposed filing certifying that the relevant investment contract has ceased to exist, provided the SEC has not challenged the filing within a specified review period. Where no Form TR exists, managers should be able to make reasonable determinations using publicly available information. Bitwise also wants issuers to provide supporting analysis rather than unsupported certifications. For crypto exchange-traded products, such distinctions affect fund eligibility, compliance costs and potentially continued product operations.
The Hyperliquid Policy Center focused on decentralized networks and trading infrastructure. Its submission argued that qualifying airdrops rewarding participation in functional blockchain networks should not automatically constitute investment contracts. It also requested clearer distinctions between programmatic token buybacks and discretionary repurchases, and warned that the proposal does not adequately resolve how tokens issued under fundraising exemptions can trade through unregistered intermediaries or decentralized protocols. The organization recommended explicit treatment of secondary-market transactions and potential exemptions for qualifying intermediaries. According to FinanceFeeds, it submitted five recommendations covering airdrops, secondary trading, safe-harbor access, buybacks and federal preemption of certain state requirements.
The two submissions diverge on issuer transparency. Bitwise wants detailed supporting analysis so managers can independently verify whether conditions for ending an investment contract have been met. The Hyperliquid Policy Center contends that mandatory public analysis could expose developers to litigation by requiring them to document historical representations and promises, and proposed certification without publication or confidential submission to SEC staff. This presents a trade-off between accessibility of the safe harbor and investors' ability to evaluate issuers' claims.
Stark and Reiners went further in an October 16 letter, arguing that the SEC lacks sufficient statutory authority to establish the proposed exemptions and that the framework would weaken established investor protections. They criticized the possibility of issuers effectively certifying their way out of securities oversight, and warned that substantially similar rules could trigger immediate litigation. The SEC must evaluate the submissions before deciding whether to revise, adopt or withdraw the proposal, and any adoption would require further commission action. The proposed exemptions and safe harbor are not currently in force, and existing securities-law requirements continue to apply.
The SEC's Regulation Crypto Assets, proposed in August, would establish two registration exemptions: up to $5 million in fundraising over four years and up to $75 million within any 12-month period. It would also introduce a conditional safe harbor allowing qualifying investment contracts associated with crypto assets to cease being treated as securities.
Bitwise argued that asset managers need objective standards for determining whether cryptocurrencies can be included in investment products without creating excessive securities-law exposure. The firm proposed allowing managers to rely on an issuer's Form TR, a proposed filing certifying that the relevant investment contract has ceased to exist, provided the SEC has not challenged the filing within a specified review period. Where no Form TR exists, managers should be able to make reasonable determinations using publicly available information. Bitwise also wants issuers to provide supporting analysis rather than unsupported certifications. For crypto exchange-traded products, such distinctions affect fund eligibility, compliance costs and potentially continued product operations.
The Hyperliquid Policy Center focused on decentralized networks and trading infrastructure. Its submission argued that qualifying airdrops rewarding participation in functional blockchain networks should not automatically constitute investment contracts. It also requested clearer distinctions between programmatic token buybacks and discretionary repurchases, and warned that the proposal does not adequately resolve how tokens issued under fundraising exemptions can trade through unregistered intermediaries or decentralized protocols. The organization recommended explicit treatment of secondary-market transactions and potential exemptions for qualifying intermediaries. According to FinanceFeeds, it submitted five recommendations covering airdrops, secondary trading, safe-harbor access, buybacks and federal preemption of certain state requirements.
The two submissions diverge on issuer transparency. Bitwise wants detailed supporting analysis so managers can independently verify whether conditions for ending an investment contract have been met. The Hyperliquid Policy Center contends that mandatory public analysis could expose developers to litigation by requiring them to document historical representations and promises, and proposed certification without publication or confidential submission to SEC staff. This presents a trade-off between accessibility of the safe harbor and investors' ability to evaluate issuers' claims.
Stark and Reiners went further in an October 16 letter, arguing that the SEC lacks sufficient statutory authority to establish the proposed exemptions and that the framework would weaken established investor protections. They criticized the possibility of issuers effectively certifying their way out of securities oversight, and warned that substantially similar rules could trigger immediate litigation. The SEC must evaluate the submissions before deciding whether to revise, adopt or withdraw the proposal, and any adoption would require further commission action. The proposed exemptions and safe harbor are not currently in force, and existing securities-law requirements continue to apply.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.