Key Takeaways
- • Bitwise Asset Management and the Hyperliquid Policy Center submitted comment letters on Oct. 19 urging the SEC to revise parts of its proposed "Regulation Crypto Assets" before any final adoption.
- • Bitwise asked the SEC for clear standards, based solely on public information, for determining whether a specific crypto asset is a security, plus a defined reliance standard for issuer Form TR filings.
- • Hyperliquid urged broader conditional regulatory relief, clearer rules for airdrops tied to network participation and for token buybacks, and an explicit secondary-market framework covering exchanges and decentralized trading platforms.
- • Former SEC enforcement official John Reed Stark and Duke University professor Lee Reiners argued the proposal should be withdrawn, saying it may exceed the SEC's legal authority and weaken investor protection.
- • The SEC has not disclosed a timeline; it will decide whether to revise, adopt or withdraw the proposal, and any final rule requires a commission vote.
Summary
The U.S. crypto industry is pressing the Securities and Exchange Commission to clarify how it determines whether a token is a security, as well as how airdrops and secondary-market trading would be treated under the proposed "Regulation Crypto Assets." According to Cointelegraph, which reported on Oct. 20, Bitwise Asset Management and the Hyperliquid Policy Center submitted comment letters on Oct. 19 urging revisions to parts of the proposal.
The proposal would exempt certain crypto fundraising activities from securities regulations if specified conditions are met, and would provide conditional regulatory relief for tokens tied to investment contracts. The SEC accepted public comments through Oct. 20 and plans to review whether to finalize the rule.
Bitwise argued that asset managers need clear standards to determine whether a particular crypto asset qualifies as a security, and that this assessment should be possible using only publicly available information. The firm also asked the SEC to specify the standard for relying on an issuer's Form TR filing, which confirms the end of an investment contract, and to explain how tokens should be evaluated when no such filing exists.
The Hyperliquid Policy Center said the proposed relief should apply more broadly, noting that under the current proposal projects may not meet the conditions for relief until development is already well advanced. It also called for clearer standards for airdrops distributed as network participation rewards and for token buybacks. On secondary markets, Hyperliquid said it is unclear whether unregistered intermediaries can support token trading and how far open trading through on-chain protocols would be permitted, arguing the rule should explicitly set out a framework for exchanges and decentralized trading platforms.
Not all commenters sought revision. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners, in a comment letter submitted on Oct. 16, argued the proposal should be withdrawn, stating it may exceed the SEC's legal authority and could weaken investor protection. They contended that existing securities law and the Howey Test are sufficient to determine whether a crypto asset is a security.
The SEC will decide whether to revise, adopt or withdraw the proposal after reviewing the comments. No timeline for a final decision has been disclosed, and any rule would require a vote by the commission.
The proposal would exempt certain crypto fundraising activities from securities regulations if specified conditions are met, and would provide conditional regulatory relief for tokens tied to investment contracts. The SEC accepted public comments through Oct. 20 and plans to review whether to finalize the rule.
Bitwise argued that asset managers need clear standards to determine whether a particular crypto asset qualifies as a security, and that this assessment should be possible using only publicly available information. The firm also asked the SEC to specify the standard for relying on an issuer's Form TR filing, which confirms the end of an investment contract, and to explain how tokens should be evaluated when no such filing exists.
The Hyperliquid Policy Center said the proposed relief should apply more broadly, noting that under the current proposal projects may not meet the conditions for relief until development is already well advanced. It also called for clearer standards for airdrops distributed as network participation rewards and for token buybacks. On secondary markets, Hyperliquid said it is unclear whether unregistered intermediaries can support token trading and how far open trading through on-chain protocols would be permitted, arguing the rule should explicitly set out a framework for exchanges and decentralized trading platforms.
Not all commenters sought revision. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners, in a comment letter submitted on Oct. 16, argued the proposal should be withdrawn, stating it may exceed the SEC's legal authority and could weaken investor protection. They contended that existing securities law and the Howey Test are sufficient to determine whether a crypto asset is a security.
The SEC will decide whether to revise, adopt or withdraw the proposal after reviewing the comments. No timeline for a final decision has been disclosed, and any rule would require a vote by the commission.
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.