Bitwise, Hyperliquid Urge SEC to Revise Crypto Rules and Clarify Token Security Standards
Summary
- Bitwise Asset Management and the Hyperliquid Policy Center urged the SEC to revise parts of Regulation Crypto Assets.
- Bitwise asked for clear standards to help asset managers determine whether a specific digital asset qualifies as a security, and for more detailed guidance on Form TR.
- The Hyperliquid Policy Center called for a broader safe harbor, clearer rules for airdrops and token buybacks, and explicit secondary-market rules for trading platforms.
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The U.S. crypto industry has asked the Securities and Exchange Commission to clarify the standards it uses to determine whether tokens are securities, as well as its rules for airdrops and secondary-market trading.
Cointelegraph reported on October 20 that Bitwise Asset Management and the Hyperliquid Policy Center, in comment letters submitted to the SEC a day earlier, urged the agency to revise parts of its proposed Regulation Crypto Assets.
The proposal would exempt certain crypto fundraising activities from securities regulation if they meet specified conditions. It would also provide conditional regulatory relief for tokens tied to investment contracts. The SEC accepted public comments through October 20 and will decide whether to finalize the rule.
Bitwise said clearer standards are needed so asset managers can determine whether a specific digital asset falls under securities law. It added that the assessment should be possible using only publicly available information. The firm also asked the SEC to specify how much reliance market participants can place on an issuer’s Form TR filing, which confirms the end of an investment contract, and how tokens without such a filing should be evaluated.
The Hyperliquid Policy Center said the proposed safe harbor should be broadened. Under the current draft, projects may not qualify until development is already substantially advanced. It also asked the SEC to clarify the regulatory treatment of airdrops distributed as rewards for network participation and of token buybacks.
Uncertainty around the secondary market has also emerged as a key issue. Hyperliquid said it remains unclear whether unregistered intermediaries can support token trading and how far permissionless trading through on-chain protocols would be allowed. It argued that the SEC should explicitly spell out secondary-market rules for centralized exchanges and decentralized trading platforms.
Others argued the proposal should be withdrawn altogether. Former SEC enforcement official John Reed Stark and Duke University finance professor Lee Reiners said in a comment letter submitted on October 16 that the proposal could exceed the SEC’s legal authority and weaken investor protection. In their view, existing securities laws and the Howey Test are sufficient to determine whether a crypto asset is a security.
After reviewing the comments, the SEC will decide whether to revise, adopt or withdraw the proposal. No timetable for a final decision has been disclosed, and any rule would require a vote by the commission.
