Hyperliquid Policy Center Proposes Five Revisions to SEC Crypto Framework
Advocacy group seeks regulatory clarity on token distributions and market trading mechanics.
1Regulatory Framework Consultation
The Hyperliquid Policy Center has formally responded to the SEC’s proposed Regulation Crypto Assets framework. While acknowledging the regulator's attempt to clarify securities law application to digital assets, the group warns that current proposals create unnecessary barriers. They submitted their detailed commentary on October 19 to influence the ongoing rulemaking process.
2Token Airdrop Administrative Concerns
A primary focus of the critique involves the administrative treatment of token airdrops. The center argues that current SEC proposals fail to account for the practical realities of how these distributions function. They are urging the commission to revise its stance to ensure that standard distribution mechanisms do not inadvertently trigger restrictive compliance burdens.
3Post-Distribution Trading Hurdles
The group is challenging how tokens are permitted to trade following an exempt distribution. They contend that the current framework lacks the necessary flexibility for secondary market activity. Without clear adjustments, developers face significant uncertainty regarding how their assets circulate once they move beyond the initial issuance phase and into broader public usage.
4Safe Harbour Protection Limits
A critical point of contention is whether the proposed safe harbour offers sufficient protection for projects as they mature. The center questions if the current legal safeguards are robust enough to shield developers once a network reaches a decentralized state. They seek clearer definitions to prevent projects from remaining indefinitely tied to original issuers.
5Buybacks and State Coordination
The submission highlights the need for explicit rules regarding token buybacks, which remain a grey area under current proposals. Furthermore, the center demands a more consistent approach to the interaction between federal exemptions and various state securities requirements. This alignment is essential to prevent conflicting regulatory obligations for developers operating across multiple jurisdictions.
6Evolution of Network Tokens
The proposal addresses the fundamental challenge of how network tokens evolve from fundraising instruments into functional assets. These tokens often circulate among thousands of participants who have no direct relationship with the original issuer. Applying decades-old securities tests to this dynamic environment has proven difficult, necessitating a modern, predictable regulatory approach for developers.
7Industry Disagreement on Boundaries
While the SEC aims to provide predictable treatment for crypto assets, the consultation process reveals deep industry divisions. Participants continue to disagree on where the boundaries of securities law should fall. The Hyperliquid Policy Center’s submission represents one perspective in a broader debate regarding how to balance investor protection with technological innovation.
8Future Regulatory Outcomes
The advocacy group’s submission is not a binding regulatory decision but a contribution to the formal rulemaking process. The final outcome depends entirely on how the commission evaluates the evidence and objections received during this consultation. Future market stability hinges on the SEC's willingness to incorporate these specific operational feedback points.