Hyperliquid Policy Center Proposes Key Amendments to SEC Crypto Rules

The Hyperliquid Policy Center (HPC) has officially submitted a formal letter of opinion to the U.S. Securities and Exchange Commission (SEC) regarding proposed regulatory frameworks for digital assets. On October 19, 2026, the organization expressed its general support for the SEC's "Crypto Asset Regulatory Rules" while simultaneously outlining five critical amendments designed to provide greater legal clarity for blockchain developers and market participants. These recommendations aim to bridge the gap between traditional securities law and the unique technical architecture of decentralized finance (DeFi).

Clarifying Airdrops and Intermediary Roles

The first major recommendation focuses on the codification of eligible airdrops into formal regulatory rules. The HPC argues that the receipt and compliant operation of tokens distributed via airdrops should not be interpreted as "payment consideration." By establishing this distinction, the center seeks to protect projects that use token distributions as a tool for decentralization rather than as a traditional fundraising vehicle. Additionally, the proposal calls for clearer definitions of intermediary roles in secondary market trading and within on-chain protocols. This distinction is vital for ensuring that automated smart contracts are not unfairly classified under the same regulatory requirements as centralized brokerage firms.

Safe Harbor Provisions and Token Buybacks

A significant portion of the HPC's letter addresses the need for a robust safe harbor mechanism. The center suggests that projects should be allowed to utilize safe harbor protections without being forced to acknowledge that their tokens previously involved investment contracts. This amendment would extend regulatory protections back to the development stage, allowing teams to focus on technological innovation before achieving full decentralization. Furthermore, the HPC introduced guidance on token buybacks, emphasizing a structural difference between automated buybacks executed by pre-established code and those decided autonomously by a project’s management team.

• Formalization of airdrop rules to exclude them from "investment contract" definitions.
• Differentiation between automated protocol-led buybacks and manual corporate actions.
• Extension of safe harbor protections to cover the early development phases of a project.
• Clarification of state-level legal protections once federal safe harbor conditions are met.

Conclusion

The submission by the Hyperliquid Policy Center underscores a growing trend of industry-led efforts to refine digital asset oversight in the United States. By advocating for specific technical nuances—such as the distinction between on-chain execution and manual intervention—the HPC aims to create a framework that balances investor protection with the operational realities of the blockchain ecosystem. As the SEC reviews these comments, the industry awaits a final ruling that could determine the legal landscape for token distributions and protocol governance for years to come.