Bitwise and Hyperliquid Press SEC for Clearer Token Trading and Airdrop Rules

Bitwise Asset Management and the Hyperliquid Policy Center have filed formal comment letters with the US Securities and Exchange Commission, urging the agency to revise its proposed Regulation Crypto Assets before the public comment period closes. The proposals would establish exemptions for qualifying crypto fundraising and a conditional safe harbor for tokens tied to investment contracts, but both firms argue the framework as written leaves critical questions unanswered for institutional participants and decentralized platforms.

In its October 19 submission, Bitwise called on the SEC to clarify how investment managers should determine whether a crypto asset falls under securities laws, advocating for a standard assessable through publicly available information. The firm also pressed for clearer guidance on when managers can rely on an issuer's proposed Form TR filing, which would certify that an investment contract has ceased to exist, as well as how to evaluate tokens when no such filing is made. The Hyperliquid Policy Center, in its own letter, argued that the proposed safe harbor arrives too late in a typical project's lifecycle and called for explicit protections for airdrops that reward network participation, along with formal guidance on token buybacks. Hyperliquid also warned that the rules fail to address whether unregistered intermediaries can facilitate token trading and whether tokens can trade freely through onchain protocols, leaving exchanges and decentralized venues in regulatory limbo.

The industry pushback stands in contrast to objections from former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners, who in an October 16 letter urged the commission to withdraw the proposal entirely. They argued it exceeds the agency's statutory authority and would erode investor protections, contending that existing securities laws and the Supreme Court's Howey test already supply an adequate framework for regulating crypto offerings. Meanwhile, House Financial Services Committee chair French Hill has separately stated that the SEC's current approach to crypto "falls short" of the CLARITY Act, signaling continued congressional scrutiny as the commission weighs its final rulemaking.