Hyperliquid Policy Center asks SEC for five changes to crypto rules

Key takeaways

  • Hyperliquid Policy Center supports the proposed Regulation Crypto Assets from the US Securities and Exchange Commission but asks for five refinements before finalization.
  • The changes target airdrops, secondary trading, safe harbor certification, token buybacks and federal preemption.
  • The proposal includes a $5 million startup exemption over four years, a $75 million fundraising exemption over a 12-month period, and a safe harbor for tokens no longer tied to an investment contract.
  • The letter shows that supportive industry groups still see unresolved legal uncertainty in the draft.

What happened
The Hyperliquid Policy Center submitted a comment letter urging the US Securities and Exchange Commission to make five changes to its proposed Regulation Crypto Assets. CryptoPotato first reported the submission. The group supports the proposal but says some parts need more clarity before finalization. Its main goal is to make it easier for crypto projects to operate in the United States without unnecessary legal uncertainty.

The request follows regulatory steps taken in 2026. In March, the SEC issued an interpretation covering how securities laws apply to several types of token distributions, including airdrops. Five months later, it proposed Regulation Crypto Assets. The proposal would allow token offerings of up to $5 million over four years under a startup exemption. A separate fundraising exemption would allow up to $75 million in a 12-month period. It would also introduce a safe harbor to clarify when a token is no longer tied to an investment contract.

The first recommendation concerns airdrops. The group wants the final rule to clearly state that recipients who receive tokens without giving anything in return have not made an investment of money. Users may receive tokens for using a network, running validators or providing liquidity. It says these activities should not automatically make an airdrop an investment contract. It also wants confirmation that routine steps such as connecting a wallet or completing sanctions checks do not count as payment.

The second recommendation focuses on secondary trading. The group says the SEC must explain how tokens distributed under the proposed exemptions can be traded, and whether on-chain protocols and other intermediaries can facilitate those trades without registering with the agency.

The third recommendation involves the safe harbor. Current certification requirements could put projects in a difficult position. Some developers may be unable to certify that they have completed essential managerial work without implying their tokens were previously subject to securities laws. The group wants projects to use the safe harbor without making that admission, and wants protection to cover projects still developing their networks.

The fourth recommendation concerns token buybacks. The group wants the SEC to use a consistent definition of an issuer across the rule, incorporate existing staff guidance on buybacks, and distinguish automatic buybacks governed by published rules from case-by-case buybacks.

The fifth recommendation is about federal preemption. The group wants federal protections to remain in place after a project qualifies for the safe harbor. Under the current proposal, those protections would end, potentially leaving tokens subject to registration requirements across more than 50 jurisdictions.

Market context
The letter sits within a broader effort by the SEC to give token issuers clearer paths under US securities law. The March interpretation and the proposed Regulation Crypto Assets suggest the agency is trying to separate token distribution mechanics from traditional investment contract analysis, especially for airdrops and early-stage offerings.

The proposed exemptions create distinct compliance lanes. A $5 million startup exemption over four years and a $75 million fundraising exemption over 12 months cover different project sizes and capital-raising timelines. The safe harbor is intended to mark when a token may no longer be an investment contract, but its effect depends on certification, issuer definitions and trading rules.

The concerns also highlight a structural tension in token networks. Technical participation, liquidity provision and governance-like actions may not look like ordinary securities transactions. If the final rule does not distinguish those activities from payment for an investment, projects may face uncertainty even when trying to comply.

Why it matters
For crypto projects, uncertainty affects product design as well as legal risk. Airdrop mechanics, validator rewards, liquidity incentives, buybacks and secondary market access all depend on how regulators define payment, investment, issuer activity and safe harbor eligibility. The five requested changes target those pressure points.

The safe harbor is especially important because it determines when a project may move beyond a securities-law framework. If certification forces developers to acknowledge prior securities-law exposure, the rule could create a trap for projects trying to exit that exposure. If federal protections disappear after safe harbor qualification, projects may still face registration requirements in more than 50 jurisdictions, reducing the value of the federal framework.

Secondary trading clarity also matters because exempted tokens may still need markets. If on-chain protocols and intermediaries cannot understand their registration obligations, liquidity may be constrained by compliance ambiguity rather than technical limits.

What to watch
The main question is whether the SEC incorporates the five refinements into a final rule. Watch whether the final text states that airdrop recipients who give no value have not made an investment, whether wallet connection and sanctions checks are excluded from payment, and whether secondary trading by on-chain protocols is addressed.

Also watch the safe harbor certification language, especially whether projects can qualify without implying earlier securities-law exposure. The treatment of buybacks will show whether the SEC adopts a consistent issuer definition and separates automatic, rule-based buybacks from discretionary ones. Finally, the scope of federal preemption after safe harbor qualification will indicate whether the proposal reduces multi-jurisdiction registration risk or leaves projects exposed across more than 50 jurisdictions.