Hyperliquid Policy Center Challenges SEC Crypto Rule Framework

The policy organization supports the SEC’s attempt to establish registration exemptions but warns that the framework fails to account for the unique operational realities of decentralized networks. A primary concern involves token airdrops; the group is urging the SEC to codify existing interpretations into final rules, ensuring that distributions are not classified as securities transactions simply because they involve routine administrative steps like wallet connections or sanctions screening.

Secondary market liquidity remains another point of contention. The group asserts that the proposed exemptions for capital raising will prove ineffective if recipients lack clear paths to trade tokens on decentralized protocols. Furthermore, the submission challenges the SEC’s proposed safe harbor, which requires developers to certify the cessation of managerial efforts. The organization argues this creates a legal trap, as projects may view the certification as an implicit admission that their tokens were originally securities, and it advocates for protections that apply even while network development is ongoing.

Finally, the group is pushing for a distinction between automated token repurchases and discretionary buybacks. They contend that buybacks governed by immutable smart contract code should not be treated the same as those directed by centralized operators. The SEC, which proposed the framework in August 2026 to govern investment contracts in crypto, has yet to signal whether it will incorporate these suggestions before finalizing the regulation.