Bitwise and Hyperliquid Split on Disclosures as SEC Crypto…

Bitwise Asset Management and the Hyperliquid Policy Center have separately urged the US Securities and Exchange Commission to revise its proposed cryptocurrency rulebook, filing submissions on October 19 as the public comment period closed on October 20. Both supported clearer regulation but diverged on how tokens should stop being treated as securities, and on what issuers must publish to prove it.

The SEC's Regulation Crypto Assets, proposed in August, would create two registration exemptions — fundraising of up to $5 million over four years and up to $75 million in any 12-month period — plus a conditional safe harbor letting qualifying investment contracts attached to crypto assets fall outside securities treatment.

Asset managers want objective tests

Bitwise argued that investment managers, unlike token issuers, depend heavily on third-party information and need objective standards before adding an asset to a product. Its due diligence already requires assessing whether a token carries undue risk of being deemed a security, which it said can consume significant legal resources. The firm proposed letting managers rely on an issuer's Form TR — a filing certifying the relevant investment contract has ended — provided the SEC does not challenge it within a set review period. Where no Form TR exists, managers should be able to make reasonable determinations from public information, Bitwise said, and issuers should publish supporting analysis rather than bare certifications.

The Hyperliquid Policy Center focused on decentralized networks and trading infrastructure. It argued that qualifying airdrops rewarding participation in functioning blockchains should not automatically become investment contracts simply because users acted before receiving tokens, and asked for clearer separation between rule-based programmatic buybacks and discretionary repurchases by project operators. It also warned the proposal leaves unresolved how tokens issued under the exemptions trade through unregistered intermediaries or decentralized protocols, and recommended explicit treatment of secondary-market transactions with possible relief for qualifying intermediaries. The group submitted five recommendations covering airdrops, secondary trading, safe-harbor access, buybacks and federal preemption of certain state requirements.

The two letters clash over transparency. Bitwise wants detailed public analysis so managers can independently assess whether safe-harbor conditions are met. Hyperliquid countered that mandatory public analysis could expose developers to litigation over historical statements, proposing instead that issuers certify compliance without publishing the analysis, or file supporting material confidentially with SEC staff.

On October 16, former SEC enforcement official John Reed Stark and Duke University's Lee Reiners went further, calling for the proposal to be withdrawn, questioning the agency's statutory authority and warning that adoption could trigger immediate litigation. The SEC has not set a timetable for a final rule, and none of the proposed exemptions or the safe harbor is currently in force.