On October 19, 2026, the Hyperliquid Policy Center (HPC), the research and policy advocacy arm of the Hyperliquid exchange ecosystem, officially submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) regarding the proposed rule Regulation Crypto Assets.
Originally published by the SEC in August 2026, this proposal aims to establish an exemption framework for startup token offerings under 5 million USD within 4 years and fundraising rounds under 75 million USD within 12 months. While appreciating the regulator’s efforts to build a framework, the HPC argued that the current draft still leaves serious regulatory gaps and put forward 5 key recommendations for improvement.
Five key recommendations to remove barriers for developers
In its comment letter, the HPC focused on practical issues facing blockchain developers in the U.S.:
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Codifying that airdrops do not constitute securities: Directly incorporating interpretations into regulatory text, affirming that free token distributions (airdrops) to network users are not investment contracts under the Howey Test because recipients do not provide tangible and definable consideration. In particular, mandatory technical actions such as connecting wallets or undergoing anti-money laundering sanctions screenings must not be treated as payment.
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Clarifying the legal status of secondary trading: Allowing exempt tokens to trade freely on secondary markets from the outset, while clarifying the liabilities of on-chain protocols and decentralized exchanges so that these platforms are not misclassified as unregistered securities broker-dealers.
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Reforming safe harbor conditions: Not forcing projects to implicitly concede that their tokens were once investment contracts when electing safe harbor relief, while extending protection to teams while the project is still actively being built and developed.
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Clearly distinguishing token buyback activities: Codifying SEC staff guidance into formal regulation, drawing a clear line between programmatic buybacks and discretionary buybacks controlled by a single party.
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Ensuring the permanence of federal preemption: Mandating that federal preemption remains in effect even after a project meets the conditions of the safe harbor, avoiding the risk that newly launched tokens become entangled in more than 50 separate state securities regulatory regimes.
Efforts to bring tech capital back to the U.S.
The HPC noted that over the past decade, the absence of clear regulations has forced numerous fintech projects to incorporate offshore and completely geo-block U.S. users from participating in token distributions.
However, this is merely a comment submission from an industry policy organization during the public comment period, not a decision adopted by the SEC. How the SEC incorporates these proposals into the final version will be a major test of whether web3 founders can feel secure staying and building digital asset infrastructure in the U.S.