Hyperliquid Policy Center Urges SEC to Refine Crypto Rules…

The Hyperliquid Policy Center (HPC) has asked the US Securities and Exchange Commission to adjust its proposed cryptocurrency rulebook, filing a comment letter dated October 19, 2026 that sets out five recommended changes. The advocacy organization said it supports Regulation Crypto Assets, which the SEC proposed in August, but flagged provisions it believes leave blockchain developers and token holders facing avoidable legal uncertainty. The public comment window closes on October 20, and the SEC has neither adopted the framework nor set a date for final implementation.

The proposal under review includes a startup exemption for qualifying token offerings of up to $5 million spread over four years, plus a separate fundraising exemption allowing up to $75 million in any 12-month window. It also introduces a safe harbor covering the point at which a crypto asset is no longer tied to an investment contract, along with relief from certain state registration obligations.

Airdrops and secondary trading in focus

HPC's first recommendation concerns airdrops, specifically distributions where recipients give no payment or other consideration. The organization wants the SEC to fold its March 2026 interpretive guidance into the final rule, recognizing that qualifying free distributions do not meet the investment-of-money test for an investment contract. Administrative steps such as linking a wallet or completing sanctions screening should not automatically count as consideration, HPC argued, drawing a line between those procedures and services delivered in exchange for tokens.

The second recommendation addresses secondary-market activity. HPC wants tokens issued under the proposed exemptions to be freely tradable from the outset, with clearer treatment for intermediaries and decentralized protocols that facilitate trades. Absent that clarity, the group contends, developers and market participants may remain unsure whether routine trading triggers securities registration duties — a question that matters for decentralized exchanges and networks trying to support liquidity while staying compliant. The letter does not assert that every airdrop or secondary trade falls outside securities law.

HPC's remaining points target the safe harbor, token buybacks and state rules. The organization argues developers should not have to concede that their tokens were previously investment contracts in order to qualify, and that the protection should cover networks still in essential development. It also asks the SEC to separate automated repurchases executed under published protocols from discretionary buybacks run by identifiable entities, and to keep federal preemption of state registration in force after a project meets the safe harbor conditions.

The submission lands as US regulators continue drawing boundaries between securities offerings, decentralized infrastructure and ordinary crypto trading. The final rules could shape token fundraising and US market access for developers, and secondary-market liquidity and disclosure duties for investors. HPC's recommendations remain proposals from an industry advocacy group rather than relief currently available to market participants.