The Hyperliquid Policy Center (HPC) has called for changes to the U.S. Securities and Exchange Commission’s proposed cryptocurrency regulations. Its recommendations address token airdrops, secondary trading, developer protections, buybacks, and state securities requirements. The organization supports the proposed framework but believes several provisions need clearer legal treatment. Its submission comes as the SEC approaches the October 20 public comment deadline.
Hyperliquid Policy Center seeks five SEC rule changes covering airdrops, token trading and developer protections.
Hyperliquid Policy Center Calls for Clearer Airdrop Rules
According to its October 19 announcement, HPC submitted five recommendations concerning the SEC’s proposed Regulation Crypto Assets framework. Introduced in August 2026, the proposal would establish registration exemptions for certain cryptocurrency offerings. However, those exemptions remain proposals rather than approved regulatory provisions.
Under the framework, qualifying projects could raise $5 million over four years through a startup exemption. Another exemption would permit fundraising of up to $75 million within 12 months. HPC supports these provisions while requesting additional protections for developers and token holders.
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One recommendation concerns cryptocurrency airdrops, particularly distributions made without payment from recipients. HPC wants the SEC to incorporate its March interpretation of airdrops into the final regulation. According to the group, free distributions generally lack the investment-of-money requirement associated with investment contracts.
Additionally, HPC argues that routine administrative procedures should not automatically count as payment for tokens. Such activities include connecting cryptocurrency wallets and completing sanctions screening before receiving assets. However, providing services specifically in exchange for tokens could raise different legal questions.
Hyperliquid Urges SEC to Address Secondary Token Trading
Secondary trading represents another concern raised in the organization’s submission. HPC wants clearer rules governing tokens distributed through the proposed registration exemptions. Its request also covers decentralized protocols and intermediaries involved in subsequent transactions.
Although the SEC’s proposal addresses certain resales, questions remain about platforms facilitating secondary-market activity. HPC argues that limited trading opportunities could reduce the practical benefits of the proposed exemptions. Its submission references the SEC’s economic analysis concerning the importance of secondary-market liquidity.
However, the organization has not requested unconditional exemptions for every cryptocurrency trading platform. Existing securities requirements may still apply to exchanges, brokers, and other intermediaries. HPC instead wants the SEC to clarify which activities remain subject to those obligations.
Developer Safe Harbor Faces Proposed Changes
HPC also seeks revisions to the proposed safe harbor for cryptocurrency projects. Under the draft, qualifying tokens could cease being tied to investment contracts after specified managerial activities end. Developers would need to satisfy certain conditions before receiving that treatment.
However, HPC argues that the certification process could create unintended legal risks. Projects claiming their tokens were never associated with investment contracts might face difficulties completing the required declaration. The organization wants alternative certification language that avoids implying a previous securities relationship.
Another recommendation concerns protections for projects still undergoing development. HPC believes regulatory uncertainty is particularly significant while developers continue essential managerial work. Its proposal would extend safe harbor protections beyond the conditions currently described by the SEC.
Token Buybacks and State Securities Rules Draw Attention
Token repurchases form the fourth recommendation in HPC’s submission. The organization wants regulators to distinguish automatic buybacks from purchases controlled by centralized project operators. It also requests consistent terminology when identifying parties responsible for cryptocurrency-related managerial decisions.
According to HPC, independent validators and network participants should not automatically be classified as one controlling group. Shared economic interests alone should not determine whether participants collectively direct a project’s activities. The group wants existing SEC staff guidance on buybacks reflected in the final rules.
Finally, HPC wants federal protections against certain state securities registration requirements to remain effective after safe harbor conditions are satisfied. It argues that removing those protections could create fresh regulatory uncertainty for qualifying projects. However, federal preemption would not eliminate every state law affecting cryptocurrency businesses.
The SEC has not adopted HPC’s recommendations, and Regulation Crypto Assets remains under consideration. Public comments are due October 20 under rulemaking file S7-2026-27. Any final requirements will depend on the agency’s review and subsequent regulatory decisions.
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