Hyperliquid Policy Center submits five recommendations to revise SEC's proposed crypto regulation

On October 19, 2026, the Hyperliquid Policy Center submitted a comment letter to the U.S. Securities and Exchange Commission requesting five key revisions to the proposed Regulation Crypto Assets framework. While supporting the SEC's fundraising exemptions of up to $75 million, the policy group called for explicit protections regarding airdrops, decentralized secondary trading, developer safe harbors, automated buybacks, and permanent federal preemption over state registration rules ahead of the October 20 comment deadline.

SEC comment letter submission

• ▪The public comment period for the SEC's proposed Regulation Crypto Assets framework, published in August 2026, closes on October 20, 2026.
• ▪The SEC's proposed Regulation Crypto Assets framework permits eligible crypto projects to raise up to $5 million over four years under a startup exemption or up to $75 million annually under a fundraising exemption.
• ▪The Hyperliquid Policy Center filed a comment letter on October 19, 2026, requesting five key revisions to the U.S. Securities and Exchange Commission's proposed Regulation Crypto Assets framework.
• ▪Hyperliquid Policy Center representatives previously met with the SEC Crypto Task Force on July 14, 2026, to discuss cryptocurrency regulation.
• ▪The House Oversight Committee demanded internal data from Hyperliquid co-founder Jeff Yan in September 2026 as part of an investigation into possible insider trading ahead of tariff announcements.

Airdrop securities treatment clarification

• ▪The Hyperliquid Policy Center recommended that routine administrative delivery steps, such as connecting a wallet or completing sanctions and KYC screening, should not be legally interpreted as payment for airdropped tokens.
• ▪The Hyperliquid Policy Center requested that the SEC formally clarify that free token airdrops do not constitute investment contracts when recipients provide no tangible, measurable consideration.
• ▪In March 2026, the SEC and CFTC issued a joint guidance interpretation addressing how federal securities laws apply to cryptocurrency activities, including airdrops and staking.

Secondary market trading rules

• ▪The Hyperliquid Policy Center urged the SEC to clarify whether unregistered trading services, decentralized exchanges, and on-chain protocols can legally facilitate secondary market transactions for tokens issued under proposed exemptions.
• ▪The Hyperliquid Policy Center cited the SEC's own economic analysis, arguing that limited secondary-market liquidity could significantly reduce the intended practical benefits of the proposed fundraising exemptions.

Developer safe harbor protections

• ▪The Hyperliquid Policy Center requested that Safe Harbor legal protections be extended to crypto projects while essential network development work is still actively underway.
• ▪The Hyperliquid Policy Center requested an alternative Safe Harbor route allowing projects to certify their tokens were never securities, avoiding the implicit admission that previous operations constituted investment contracts.

Token buyback regulatory distinctions

• ▪The Hyperliquid Policy Center asked the SEC to distinguish automated token repurchases governed by predefined blockchain code from discretionary buybacks managed by centralized project operators or corporate entities.
• ▪The Hyperliquid Policy Center cautioned the SEC against automatically treating network validators and ordinary users as a single controlling party solely because they share similar economic incentives.

State preemption requirements

• ▪The Hyperliquid Policy Center warned that expiring federal immunity would subject mature crypto projects to registration demands across more than 50 individual state jurisdictions, increasing compliance burdens.
• ▪The Hyperliquid Policy Center urged the SEC to make federal preemption of state securities registration requirements permanent after a project exits or meets the proposed Safe Harbor conditions.