Bitwise and Hyperliquid Call on SEC to Revise Crypto Rules: Focus on Token Classification, Airdrops, and Secondary Market Trading

On October 21, asset manager Bitwise Asset Management and the Hyperliquid Policy Center submitted comment letters to the U.S. Securities and Exchange Commission (SEC), requesting revisions to the proposed crypto regulations to clarify rules on token classification, airdrops, and secondary market trading. The SEC’s proposed Regulation Crypto Assets would establish exemptions for eligible crypto fundraising activities and provide a conditional safe harbor for tokens associated with investment contracts. Bitwise has called for clear standards for investment managers to determine whether tokens are subject to securities laws. The Hyperliquid Policy Center has requested an expansion of the safe harbor scope and clarification of rules governing airdrops that reward network participants as well as token buybacks. The organization also asked the SEC to clarify whether unregistered intermediaries may facilitate token transactions and whether tokens can be freely traded via on-chain protocols. Meanwhile, former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners have called for the withdrawal of the proposal, arguing that it exceeds the SEC’s statutory authority and undermines investor protection. The SEC will decide whether to amend, adopt, or withdraw the rules after the public comment period ends; the final rules will take effect only after a vote by the Commission.