The Comment Box Closes: U.S. Crypto Rules Enter a Drafting Phase No One Watches

Between October 19 and 20, the comment windows for the SEC’s Regulation Crypto Assets and the Treasury’s GENIUS stablecoin rule closed in succession, with roughly 260 submissions concluding the industry’s last written exchange. From here, U.S. crypto rulemaking enters a drafting stage with no public audience.

The Last Batch of Comments: SEC’s Crypto Asset Rule Winds Down 60 Days

At 23:59:59 Eastern Time on October 20 (11:59:59 Beijing time on October 21), the SEC’s proposed Regulation Crypto Assets (File No. S7-2026-27), first floated on August 18, closed its 60-day public comment period with roughly 140 submissions. It is the most consequential rule file on the administrative path since the CLARITY Act died in the Senate 49-50 on September 15, laying out two registration exemption lanes for issuers while leaving trading platforms just a footnote.

The framework pairs two tiers of exemption with one safe harbor. The startup exemption lets qualifying issuers raise up to $5 million over four years, skipping SEC review and using general solicitation freely after filing Form NOR. The fundraising exemption, modeled on Regulation A, runs two tiers of up to $20 million or $75 million per 12 months, requiring qualification with the SEC via Form 1-CRYPTO before any sale; Tier 2 adds audited financials and continuing reports on new Forms 1-SC, 1-KC and 1-UC. Rule 103 breaks disclosure obligations into ten areas, running from an issuer’s promised managerial efforts, token economics and allocation, lockups and release schedules, all the way to source code and smart-contract permissions. Retail non-accredited investors are capped at 10% of the greater of annual income or net worth.

The real centerpiece is the Rule 400 safe harbor: once an issuer files Form TR certifying that it has completed or permanently ceased all promised managerial efforts, the investment contract stops being a security, with no deadline, no decentralization test and no staff review. The SEC and any third party can dispute the certification. By contrast, Rule 500 preempts state registration for qualifying offerings and secondary trades, yet brokers, dealers and exchanges get no comparable relief; the SEC only promises in a footnote that it will “continue to consider whether further action” is warranted. The rule also poses question 140: when units of the same token trace back to different original offerings, how do you tell covered assets from uncovered ones. The fungibility problem has no answer in the text.

Embrace, Revise, Narrow and Reject: The Four-Way Split in the Comment Letters

The final 48 hours of the docket were crowded. On October 19, AIMA, Bitwise, the Hyperliquid Policy Center and Hivemind Capital filed in quick succession, following the Aleo Network Foundation on October 18 and earlier entries from GLEIF, Chainalysis and John Reed Stark Consulting. On October 20, Ripple submitted a 20-page letter as the loudest supporter, with Chief Legal Officer Stuart Alderoty writing on X that “case by case, coin by coin enforcement has pushed innovation offshore. We need holistic rules for digital assets.” Ripple argues the investment contract and the token itself should be judged separately, firmly rejects decentralization as an independent legal test, and wants an issuer’s completion of its promises to be the standard for ending a contract.

Ripple’s 20-page letter leans on its own $150 million litigation: after a federal judge ruled in July 2023 that XRP itself was not an investment contract, Coinbase and Kraken restored U.S. trading. The letter also cites research that the U.S. share of global crypto developers fell from 38% in 2015 to 19% in 2024. It wants exchanges and brokers to rely on filed Form TRs when deciding whether to trade a token, and asks that the treatment of separated crypto assets stay consistent across the Securities Act, the Exchange Act, the Investment Company Act and the Investment Advisers Act. The Hyperliquid Policy Center’s five requests are equally granular: codify the airdrop interpretation in the final text, exempt immediate secondary trading, protect token developers, distinguish automated buybacks from discretionary ones, and make state-law preemption permanent.

The buyback item hits Hyperliquid’s own HYPE token, repurchased with trading fees; the annual buyback stream is estimated at $800 million to $1 billion, and Bitwise’s CIO has argued HYPE trades at roughly 10 to 14 times that stream. The Policy Center wants the final rule to adopt the SEC staff’s September 28 FAQ position that buyback announcements are not promises of managerial effort when the system is functional and has no central party. If the SEC refuses, secondary trading treatment for automated-buyback tokens falls back into limbo. On the other side, traditional Wall Street institutions want investor protection written into the exemption design: SIFMA said in its October 19 letter that the five-year window “heightens the importance of resolving these questions at the outset,” because early design choices will shape market practice before any permanent framework lands; AIMA asked that disclosures distinguish utility or economic exposure from ownership, redemption, cash-flow and contractual rights.

The 91-Day Countdown and the DASP Boundary: The Last Public Contest Over Stablecoin Rules

On October 19, the Treasury’s Section 3 proposal under the GENIUS Act (TREAS-DO-2026-0496, RIN 1505-AC95, creating new 12 CFR Part 1523) closed its comment period with 123 submissions. The proposal uses 87 questions to cover issuer licensing, foreign stablecoin access, reserve composition and exchange due diligence, and applies extraterritorially: foreign issuers selling into the U.S. market fall inside the rule. Section 3(a) makes unlawful issuance by non-permitted issuers punishable by up to $1 million per violation and up to five years in prison. Downstream restrictions run on two clocks: DASPs have until July 18, 2028 to list only permitted-issuer stablecoins, while the ban on foreign-issued payment stablecoins takes effect January 18, 2027 unless the issuer registers with the OCC or obtains a waiver. When the comment window closed, Treasury, OCC, FDIC and the Fed had all published no final rules, making January 18, 2027 the hard statutory backstop, with the 120-day clause not yet triggered.

Industry letters concentrated fire on the DASP definition. The Blockchain Association’s 26-page letter argues the term should cover only customer-facing intermediaries, keeping self-custody wallet software, validators and firms trading only their own assets out of scope. It also asks that “knowing participation” be limited to actual knowledge plus substantial assistance to the issuer, so routine market making and secondary trading carry no criminal risk; for foreign issuers, it proposes relying on official prohibition lists instead of open-ended due diligence. The National Cryptocurrency Association, led by Ripple CLO Alderoty, accepts the 100% reserve requirement but demands transition safe harbors if an issuer loses its license or misses the July 18, 2028 deadline, so holders can redeem, sell or convert without loss; it also wants clear mechanisms to reissue stolen or misdirected stablecoins under court order, plus explicit protection for self-custody and peer-to-peer transfers. The entire stablecoin market stands near $302 billion, with USDT around $183 billion and USDC about $73 billion. The boundary of the rule directly decides whether these two leading tokens stay on U.S. trading platforms.

Another Thread the Same Day: FINMA Green-Lights the First Retail Bitcoin Fund

On October 20, Switzerland’s Financial Market Supervisory Authority (FINMA) approved the country’s first exchange-traded fund that invests directly in Bitcoin for retail investors. FINMA waived the applicable risk diversification rules, citing Bitcoin’s “long trading history and particularly high trading volume compared with other cryptocurrencies,” and classified the fund as an “other fund for alternative investments” with a specific risk. For contrast, the Crypto Market Index Fund approved in September 2021 sold only to qualified investors and held a basket of crypto assets rather than Bitcoin alone. FINMA did not name the fund or its issuer, saying only that other providers have submitted or announced bitcoin ETF applications.

The regulatory conditions did not loosen. FINMA’s January 12, 2026 guidance requires supervised institutions to cut operational and custody risks, flagging cyberattacks and inadequate private-key protection as operational risks. A Swiss custodian bank generally has to hold the fund’s Bitcoin, and any third-party custodian at home or abroad needs equivalent supervision of financial soundness and bankruptcy isolation. At the point of sale, firms must follow the conduct rules of Swiss financial services law: clear warnings about volatility and the risk of losing money, plus a product suitability check. FINMA says this offers more protection than buying Bitcoin directly. The significance: while the United States spent the closing days of its comment period drawing boundaries between issuers and platforms, Switzerland used a retail fund to upgrade the legal frame for bitcoin allocation from ETP to fund law, two regulatory philosophies reaching their own milestones in the same week.

Takeaways for Practitioners