Bitwise, Hyperliquid Press SEC to Clarify Token Trading and Airdrop Rules
Bitwise Asset Management and the Hyperliquid Policy Center urged the U.S. Securities and Exchange Commission on Monday to revise its proposed crypto rules, asking for clearer guidance on how tokens are classified, how airdrops are treated and how secondary-market trading works.Both groups filed comment letters ahead of Tuesday’s close of public comments on Regulation Crypto Assets. The proposal would create exemptions for qualifying crypto fundraising and a conditional safe harbor for tokens tied to investment contracts.In an Oct. 19 letter, Bitwise asked the commission to explain how investment managers should decide whether a crypto asset falls under securities laws, arguing they need a standard they can apply using “publicly available information.” The firm also wanted clearer rules on when managers can rely on an issuer’s proposed Form TR filing, which would certify that an investment contract has ceased to exist, and on how to assess tokens when no such filing exists.The Hyperliquid Policy Center focused on the safe harbor, arguing it could arrive too late in a project’s development and should be broadened. The group asked for clearer protections for airdrops that reward network participation and for guidance on token buybacks. It warned that the proposal “fails to provide clarity” on whether unregistered intermediaries can help facilitate token trading and whether tokens can trade freely through onchain protocols. The commission should address secondary-market transactions directly, the group said, rather than leave exchanges and decentralized trading venues facing regulatory uncertainty.Others want the proposal scrapped. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners urged the commission in an Oct. 16 letter to withdraw it entirely, arguing that it exceeds the agency’s statutory authority and would weaken investor protections. Existing securities laws and the Supreme Court’s Howey test already provide a framework for regulating crypto offerings, they wrote.The fundraising exemptions would loosen protections, they argued, and the safe harbor would let issuers effectively remove their tokens from securities oversight through self-certification. Adopting the rules in close to their current form, they warned, would invite an immediate legal challenge that could strike down the framework.The SEC will now review the submissions and decide whether to revise, adopt or withdraw the proposal. No timetable has been announced, and any final rule would need a commission vote before taking effect.