Two crypto industry entities took formal action ahead of the Tuesday deadline for US regulatory public comments. Bitwise Asset Management and Hyperliquid Policy Center submitted comment letters to the Securities and Exchange Commission (SEC) regarding the draft Regulation Crypto Assets rule. Both parties urged the regulator to provide legal certainty for core digital asset activities, ranging from incentive token distributions to trading on decentralized exchanges.
The moves by both organizations aim to establish clear legal protections for both protocol developers and investment managers.
Safe Harbors for Airdrops and Disintermediated Exchanges
Hyperliquid Policy Center focused its attention on token distribution mechanisms for user communities. The policy organization urged the SEC to expand safe harbor provisions to provide explicit protections for token airdrops. The distributions in question involve token grants awarded as incentives for active user participation within a network.
Beyond airdrops, Hyperliquid’s letter addressed two other technical matters. They requested that the SEC issue formal guidance regarding token buybacks conducted by issuers. Hyperliquid also called for regulatory clarity around token trading executed directly on on-chain protocols or DEXs without involving regulator-registered intermediaries.
Public Information Standards and Proof of Expired Contracts
From an asset manager’s perspective, Bitwise Asset Management highlighted hurdles in assessing an asset’s regulatory status. The investment manager urged the SEC to establish objective classification standards for crypto assets, allowing managers to determine whether a token qualifies as a security purely on the basis of publicly available information.
Bitwise also requested clarity on the use of Form TR filings. This certification serves as a mechanism for issuers to prove that an investment contract has formally expired. Establishing such a verification process is deemed essential to setting a clear end date for when an investment contract is no longer in effect.
Calls for Scrapping the Rule and Path to Formal Vote
Enforcement figures and academics swiftly pushed back against the draft regulation. Former SEC enforcement official John Reed Stark and Duke University academic Lee Reiners urged the commission to scrap the proposed rule. Both argued that the draft Regulation Crypto Assets exceeds the SEC’s statutory authority and threatens to weaken the Howey test - the core legal standard used to determine investment contract status in the US.
The regulation’s fate now rests with the commissioners. Proposals concerning safe harbors and crypto fundraising exemptions must still undergo commission review and a formal vote before they can be enacted as binding rules. The outcome of that vote will determine whether on-chain activities gain clear legal protections or remain vulnerable to ongoing legal disputes.
Reported via Cointelegraph.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
