Hyperliquid Requests Five Changes to SEC's Crypto Regulations

Hyperliquid Policy Center has presented five recommendations to amend the SEC's proposed regulations on crypto, ahead of the consultation closing on October 20, 2026.

Key Points

• Hyperliquid is requesting changes regarding airdrops, trading, developer protections, buybacks, and state registration.
• Airdrops without payment should generally remain outside the requirement for monetary investment.
• The draft provides exemptions for fundraising with caps of $5 million and $75 million.
• The group wants federal protections to continue even after compliance with the safe harbor.

The Five Requested Changes to SEC's Crypto Regulations

The requests concern both the issuance of tokens and what happens afterward: trading, developer certification, and state obligations regarding securities. They are directed at the U.S. Securities and Exchange Commission and aim to change the framework called Regulation Crypto Assets.

The draft contains separate exemptions for fundraising, with different limits and timelines. Eligible projects could raise up to $5 million over four years with the exemption for startups.

Another exemption would allow raising up to $75 million within a 12-month period.

According to the center, the value of these exemptions partly depends on whether the tokens have a functioning market for transfers or sales. For this reason, it asks the SEC to also address activities following the initial distribution.

Airdrops and Secondary Trading: Clearer Rules Needed

Hyperliquid wants the final rules to formalize the interpretation already adopted by the SEC: receiving tokens without payment generally does not meet the requirement for monetary investment. The center asks the authority to focus on one point: did the recipients exchange a concrete and definable consideration for those assets?

This approach would separate administrative tasks, such as linking a wallet or completing sanctions checks, from the work done in exchange for tokens. For the group, making the difference explicit would give developers and recipients clearer expectations as the network develops.

On secondary trading, the center asks the SEC to clarify whether assets issued under the proposed exemptions can then be traded through decentralized protocols or other intermediaries. The draft addresses some exemptions for offerings but does not outline a complete framework for exchanges after issuance.

The request also concerns protocols and participants that facilitate exchanges without being registered as intermediaries. The center acknowledges that securities rules for exchanges, brokers, and dealers continue to apply where relevant.

Developer Certification and Automatic Buybacks

Hyperliquid contests a certification condition of the safe harbor for developers. In its view, projects should not have to imply that their tokens previously involved investment contracts to gain protection.

The draft offers a conditional safe harbor for cryptocurrencies no longer linked to such contracts. The center instead wants projects to certify that their tokens have never had that connection.

It also requests that the protection covers periods when essential management work continues. Today, according to its reading, it would only kick in when that work ends or is permanently interrupted.

Regarding token buybacks, the group proposes to distinguish between purchases executed automatically according to rules published on the blockchain and those decided by a centralized operator. These mechanisms, it argues, should not automatically receive the same treatment when evaluating who directs the economic activity.

The recommendations also ask to incorporate staff guidance on buybacks and to use consistent terminology around the <>. The center warns against treating validators as a centralized group simply because they share the same incentives.

Federal Protections Even After the Safe Harbor

Hyperliquid wants federal preemption over certain state registration rules for securities to remain valid even after projects have met the conditions of the safe harbor. The proposal would override some state requirements for eligible offerings and subsequent transactions.

The group warns that losing those protections later could leave developers or holders facing state registration issues. It distinguishes SEC exemptions from broader legislative frameworks like the CLARITY Act, acknowledging that state anti-fraud rules and activities outside the exemptions would continue to apply.

The proposal remains subject to review and modifications after the consultation. The deadline for public comments is set for October 20, 2026.