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On October 21, Bitwise filed a supplemental comment letter with the U.S. Securities and Exchange Commission, a move intended to secure clearer legal protections for fund managers who rely on token-status filings under the proposed Regulation Crypto Assets framework.
Reliance Distinct From Issuance
The core of the submission made on October 21 focuses specifically on the problem of reliance. Bitwise is asking the commission to make a clear distinction between the moment an issuer files Form TR and the subsequent point at which a separate market participant is able to rely on an unchallenged filing. The letter argues that these two distinct events carry different legal weights and, as such, should be treated as separate entities under the proposed rules.
Bitwise is seeking protection for determinations made by fund managers in reasonable, good-faith capacities. The company wants a firm assurance that if a challenge arises later regarding the status of a token, the manager will not be penalized for having acted on public information that appeared to be valid at the time the decision was made. This specific protection should extend through the relevant definitions of investment-adviser and investment-company, which would ensure a level of consistency across various types of financial products.
This supplemental letter builds upon the original response that Bitwise submitted on October 19. That earlier document served to establish the company’s specific perspective within the broader rulemaking process. Bitwise describes its own position as a company that builds investment products using crypto assets, rather than a company that issues those assets itself. This distinction is central to the argument being made. The firm does not manage the development team nor does it create the underlying code, but it must still determine whether an asset qualifies as a security before it can be included in a fund.
Public Information And Legal Status
The practical concern that is driving this request is the asymmetry of information that exists between a token issuer and a fund manager. A manager often finds themselves in a position where they must make inclusion decisions using only the information available to the public. They do not have access to the technical documentation, the internal records, or the development history held by the development team or the issuer. A reliance framework would therefore define exactly when public filings can support a decision and identify what specific knowledge would prevent a firm from relying on those filings.
This framework is distinct from a declaration that any particular token is outside the scope of securities law. Instead, it creates a safe harbor for the process of evaluation itself. The submission emphasizes that the mere availability of a filing form is not the same thing as the legal consequences of using that process. Bitwise argues that the current proposal does not sufficiently address the downstream effects for third parties who depend on the data generated by issuers.
The letter also addresses the legal implications inherent in the filing itself. Bitwise argues that the act of filing Form TR should not be treated as an admission about the previous legal status of the asset. The company contends that the act of filing is a procedural step and not a definitive classification of the asset’s history or a confession of past securities law violations. Its requests concern the consequences of using the proposed process, rather than simply the availability of the form. This distinction is crucial for issuers who may be hesitant to file if the act itself is viewed as a legal admission.
The document is currently hosted in the SEC’s comment file for the proposed Regulation Crypto Assets. It should be noted that the publication of the document in this file is not an endorsement by the commission. The arguments belong solely to Bitwise, and the commission has not yet adopted these specific protections into the rule. The submission is an industry request and not an adopted rule.
Rulemaking Remains Pending
The distinction between an industry proposal and an adopted regulation is especially relevant to headlines regarding regulatory certainty. An industry participant can identify a problem and propose a detailed solution while the final outcome of the matter remains undecided. The SEC is still in the process of reviewing the comments on the proposed framework. Bitwise’s submission is one of many inputs that the commission will consider as it drafts the final rules.
For fund managers, the issue to watch in the eventual rules is how responsibility is divided between the party making a token-status filing and the firms that use it to construct financial products. Bitwise’s latest submission makes that division the center of its case. The company is pushing for a structure where the issuer bears the primary responsibility for the accuracy of the filing, while the manager receives protection for relying on that filing in good faith. This approach would reduce the legal uncertainty that currently complicates the creation of investment products based on crypto.
The SEC has not indicated when it will issue a final rule on Regulation Crypto Assets. The comment period allows for public input, and the commission will review all submissions, including the supplemental letter from Bitwise, before making any decisions. The final text of the rules will determine whether the distinction between filing and reliance is formally recognized in U.S. securities law. Until then, the protection sought by Bitwise remains a proposal rather than a legal standard.
This article was edited by Samuel Rae.
Frequently Asked Questions
When did Bitwise file this supplemental comment?
Bitwise filed the supplemental comment letter on October 21. It follows an original response submitted by the company on October 19.
Does the SEC endorse Bitwise’s proposal?
No. The document is hosted in the SEC’s comment file, but publication there is not an endorsement by the commission. The proposal remains an industry request, not an adopted rule.
