Bitwise and Hyperliquid Push SEC for Clearer Crypto Token and Airdrop Rules

Bitwise Asset Management and the Hyperliquid Policy Center are urging the US Securities and Exchange Commission to revise its proposed Regulation Crypto Assets before the public comment period closes this week, with both firms submitting comment letters on Monday seeking sharper guidance on token classifications, airdrops, and secondary-market trading. The SEC's proposal would create exemptions for qualifying crypto fundraising alongside a conditional safe harbor for tokens tied to investment contracts, but industry participants say key definitions and timelines remain ambiguous.

In its Oct. 19 letter, Bitwise pressed the SEC to clarify how investment managers should determine whether a crypto asset falls under securities laws, arguing managers need a standard they can apply using publicly available information. The firm also sought clearer rules on when managers can rely on an issuer's proposed Form TR filing to certify that an investment contract has ceased, and how to assess tokens when no such filing exists. The Hyperliquid Policy Center, in a separate submission, called for a broader safe harbor that activates earlier in a project's lifecycle, stronger protections for airdrops that reward network participation, and explicit guidance on token buybacks.

Hyperliquid also warned that the proposal fails to address whether unregistered intermediaries can facilitate token trading or whether tokens can trade freely through onchain protocols, urging the commission to directly cover secondary-market transactions rather than leave exchanges and decentralized venues in regulatory limbo. The push comes amid broader congressional scrutiny, with House Finance panel chair French Hill recently stating that current regulator actions on crypto fall short of the CLARITY bill's intent.

Not all commenters backed the industry's direction. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners submitted an Oct. 16 letter calling on the commission to withdraw the proposal entirely, arguing it exceeds the agency's statutory authority and would weaken investor protections. They maintained that existing securities laws and the Supreme Court's Howey test already provide an adequate framework for regulating crypto offerings, setting up a contentious debate as the SEC moves toward finalizing the rules.