Five Recommendations from Hyperliquid Policy Center

The Hyperliquid Policy Center submitted a detailed comment letter to the U.S. Securities and Exchange Commission, endorsing the August 2026 proposal for Regulation Crypto Assets while requesting five specific modifications. The draft framework includes two fundraising exemptions designed to support qualifying crypto projects: one allowing up to $5 million in token offerings over four years for startups, and another permitting up to $75 million within any 12-month period for other eligible offerings. Both routes carry disclosure obligations, with federal antifraud protections remaining in effect.

Hyperliquid contends that these exemptions will be most effective when paired with explicit guidance on token distribution practices and post-issuance activities, particularly for decentralized networks still in active development.

Clearer Treatment Sought for Airdrops and Token Distributions

The policy center proposes formalizing the SEC’s existing joint interpretation with the Commodity Futures Trading Commission on airdrops. It recommends that the final rules state that free token distributions generally do not trigger an investment contract when recipients provide no money, goods, services or other consideration. Routine administrative steps, such as connecting a wallet or completing sanctions screening, should also be excluded from the “investment of money” test.

This clarification, Hyperliquid argues, would prevent administrative requirements from inadvertently creating securities obligations during network launches and give developers and participants predictable expectations.

Addressing Secondary Market Trading and Intermediaries

Hyperliquid seeks explicit SEC guidance on whether tokens distributed under the proposed exemptions can be traded subsequently through decentralized protocols or unregistered intermediaries. The draft does not fully resolve the legal status of such trading activities, yet the policy center emphasizes that the exemptions’ value depends on functional secondary markets.

It acknowledges that existing securities requirements for exchanges, brokers and dealers continue to apply where those definitions are met, but calls for the agency to clarify that on-chain protocols and facilitators do not automatically face full registration burdens.

Developer Safe Harbor and Timing Concerns

The center challenges the proposed developer safe harbor, which conditions protection on the completion or permanent cessation of essential managerial efforts previously represented to investors. Hyperliquid wants issuers to be able to certify that their tokens were never linked to an investment contract, without implying any prior securities relationship.

Additionally, the group urges the safe harbor to remain available during ongoing development rather than only after managerial work ends, arguing that prolonged uncertainty could otherwise deter legitimate blockchain projects.

Distinguishing Automated Buybacks from Discretionary Purchases

Hyperliquid recommends that the SEC adopt staff guidance on token repurchases and define the term “central party” clearly. The organization proposes distinguishing programmatic buybacks executed according to published blockchain rules from those selected at the discretion of a centralized operator, to avoid conflating the two in regulatory assessments of economic direction.

Maintaining Federal Preemption After Safe Harbor

The policy center calls for continued federal preemption of certain state securities registration and qualification rules once projects satisfy the safe-harbor conditions. It warns that reverting to state-level requirements could expose projects and holders to registration processes in more than 50 jurisdictions, while distinguishing the SEC exemptions from broader statutory frameworks such as the CLARITY Act.

Hyperliquid suggests that projects meeting safe-harbor standards could retain preemption through modified continuing reporting, including an annual certification, to balance federal uniformity with ongoing obligations.

Deadline for Public Comments

The SEC’s public consultation on Regulation Crypto Assets closes October 20, 2026. The agency’s proposal remains subject to review and revision based on feedback received. Hyperliquid’s comment letter represents one of several submissions addressing the framework’s practical implications for decentralized crypto operations.