With the SEC’s comment period ending, major firms want explicit rules clarifying how crypto assets and secondary trading are classified.
As the SEC’s feedback period closes, Bitwise Asset Management and the Hyperliquid Policy Center submitted letters Monday urging regulatory revisions, demanding explicit guidance on how token classifications, airdrops, and resale markets are handled.
These appeals arrive as the SEC ends public consultation Tuesday regarding its proposed Regulation Crypto Assets, under which exemptions are granted for eligible fundraising alongside safe harbors for investment tokens.
In an Oct. 19 submission, Bitwise Asset Management urged the SEC to outline clear criteria for investment managers evaluating whether crypto assets are governed by securities regulations, emphasizing the need for standards based on publicly accessible data.
Additionally, the firm requested defined standards for when managers can depend on an issuer’s proposed Form TR—certifying that an investment contract has ended—and how tokens are evaluated when no filing is submitted.
In a distinct filing, the Hyperliquid Policy Center pressed the SEC to expand its prospective safe harbor, warning that help could arrive too late in a project’s lifecycle, while demanding explicit protections for participation-based airdrops alongside rules for how token buybacks are structured.
Hyperliquid further cautioned that the draft policy leaves critical ambiguity regarding whether unregistered brokers or onchain protocols can support token transactions, urging regulators to address secondary trading directly so decentralized venues are protected from lingering legal doubts.
SEC Proposal Draws Legal Challenges and Investor Protection Concerns
Though market participants advocated for targeted amendments, former SEC enforcement head John Reed Stark and Duke scholar Lee Reiners voiced total opposition, filing an Oct. 16 letter that urged regulators to scrap the draft entirely because core investor protections are weakened while legal boundaries are exceeded.
Stark and Reiners asserted that current securities legislation and the Supreme Court’s Howey standard already establish an adequate regulatory framework for crypto offerings, contending that new fundraising exemptions undermine buyer safeguards while safe harbors allow issuers to ensure tokens are exempted from oversight via self-certification.
The pair additionally cautioned that enacting these measures in virtually their present state would trigger immediate court opposition, likely leading to a scenario where the proposed framework is invalidated.
As the feedback window closes Tuesday, the SEC will evaluate incoming feedback before deciding whether to amend, enact, or abandon the proposal, though no timeline exists and final rules are finalized only after a formal vote.
