TLDR
- Bitwise and the Hyperliquid Policy Center filed comment letters asking the SEC to revise its proposed crypto rules.
- Bitwise wants a clear standard for deciding if a crypto asset is a security, based on public information.
- Hyperliquid asked for a broader safe harbor, airdrop protections and guidance on token buybacks.
- A former SEC enforcement official and a Duke University scholar urged the SEC to withdraw the proposal entirely.
- The comment period closed Tuesday, and the SEC has not set a timetable for a final decision.
Bitwise Asset Management and the Hyperliquid Policy Center have asked the US Securities and Exchange Commission to change its proposed crypto rules. Both groups filed comment letters on Monday, Oct. 19.
They want clearer guidance on how tokens are classified, how airdrops are treated and how tokens can trade after they are issued.
The letters arrived just before the SEC closed public comments on Tuesday for its proposed Regulation Crypto Assets.
The proposal would create exemptions for qualifying crypto fundraising. It would also set up a conditional safe harbor for tokens tied to investment contracts.
Bitwise and Hyperliquid Seek Clearer Rules
In its letter, Bitwise urged the SEC to explain how investment managers should decide whether a crypto asset falls under securities laws. The firm said managers need a standard they can apply using “publicly available information.”
Bitwise also asked for clearer rules on a proposed filing called Form TR. An issuer would use this form to certify that an investment contract no longer exists.
The firm wants to know when managers can rely on that filing. It also asked how managers should judge tokens when no Form TR has been filed.
In a separate letter, the Hyperliquid Policy Center asked the SEC to broaden its proposed safe harbor. The group said the protection could arrive too late in a project’s development.
It called for clearer protections for airdrops that reward people for taking part in a network. It also asked for guidance on token buybacks.
Hyperliquid said the proposal “fails to provide clarity” on two points. These are whether unregistered intermediaries can help with token trading and whether tokens can trade freely through onchain protocols.
The group urged the SEC to address secondary-market trading directly. It said exchanges and decentralized trading venues should not be left facing regulatory uncertainty.
Critics Call for Withdrawal
Not everyone wants the rules adjusted. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners asked the SEC to withdraw the proposal entirely.
In an Oct. 16 letter, they argued the plan goes beyond the agency’s legal authority and would weaken investor protections.
Stark and Reiners said current securities laws and the Supreme Court’s Howey test already provide a framework for regulating crypto offerings.
They said the fundraising exemptions would reduce protections for investors. They also argued the safe harbor would let issuers remove their tokens from securities oversight by certifying it themselves.
The pair warned that adopting the rules in close to their current form would invite an immediate legal challenge. That could lead to the framework being struck down.
With the comment period now closed, the SEC will review the submissions. It will then decide whether to revise, adopt or withdraw the proposed rules.
The commission has not announced a timetable for a final decision. Any final rule would need a commission vote before it takes effect.
The post Bitwise, Hyperliquid Ask SEC to Revise Proposed Crypto Rules appeared first on Blockonomi.
