The Hyperliquid Policy Center (HPC) has submitted a formal comment letter urging the U.S. Securities and Exchange Commission (SEC) to adopt five key refinements to its proposed Regulation Crypto Assets framework. While the policy group expressed overall support for the initiative, it emphasized that critical ambiguities must be resolved before the regulations are finalized.
Following an initial regulatory interpretation on token distributions and airdrops issued in March 2026, the SEC introduced Regulation Crypto Assets five months later. The proposed framework includes a startup exemption allowing token offerings up to $5 million over a four-year period, alongside a broader fundraising exemption capped at $75 million across 12 months. It also features a safe harbor mechanism intended to define when a token transitions away from being treated as an investment contract. As broader regulatory actions unfold globally—such as new crypto tax legislation in Europe—the SEC's domestic rules remain central to U.S. digital asset operations.
Refining Airdrops, Secondary Trading, and Safe Harbors
HPC's first recommendation targets the treatment of airdrops. The group requested that the final rule explicitly clarify that users who receive tokens without financial expenditure—such as by interacting with a protocol, running validators, providing liquidity, connecting wallets, or undergoing sanctions checks—have not executed an investment of money.
Second, the policy center asked the SEC to detail how tokens issued under the $5 million and $75 million exemptions may be traded on secondary markets, specifically outlining whether decentralized on-chain protocols and intermediaries can facilitate trades without registering as securities exchanges.
Third, HPC highlighted flaws in the safe harbor provisions. Under current requirements, developers must certify that essential managerial tasks are complete, which could imply that the tokens were previously illegal securities. HPC requested that projects be allowed to claim safe harbor without making such admissions, while extending safeguards to teams actively building their networks.
Clarifying Buybacks and Preserving Federal Preemption
Fourth, the comment letter urged the SEC to apply a consistent definition of a token issuer, integrate existing SEC staff guidance regarding buybacks, and draw a clear distinction between rule-based automatic buybacks and discretionary case-by-case repurchases.
Finally, HPC urged the regulator to maintain federal preemption even after a project achieves safe harbor status. Under the current draft, federal protections would expire at that juncture, leaving projects vulnerable to separate registration laws across more than 50 jurisdictions.
Key Takeaways
- Hyperliquid Policy Center backed the SEC's Regulation Crypto Assets but requested five critical revisions.
- The proposal establishes a $5 million four-year startup exemption and a $75 million annual fundraising exemption.
- Recommendations address airdrops, secondary trading, safe harbor certifications, token buybacks, and preserving federal preemption across 50+ U.S. jurisdictions.
Why It Matters
Clear compliance pathways are vital for domestic developers who have spent years navigating regulatory uncertainty under traditional securities laws. By demanding explicit rules for decentralized secondary trading and automated buybacks, HPC is attempting to bridge the gap between traditional corporate disclosures and programmatic blockchain architecture. Furthermore, retaining federal preemption post-safe-harbor is essential to prevent early-stage Web3 projects from being paralyzed by compliance across individual state jurisdictions. As financial giants submit formal SEC regulatory filings for crypto products, establishing transparent token distribution rules will dictate whether U.S. crypto development stays onshore.
