Hyperliquid Policy Center Urges SEC to Revise Crypto Rules on Buybacks and Developer Protections

The Hyperliquid Policy Center has submitted five recommendations urging the SEC to clarify crypto rules covering token airdrops, automated buybacks, secondary trading, and developer protections under its proposed regulatory framework.

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Hyperliquid Policy Center Seeks Changes to SEC Crypto Rules

The Hyperliquid Policy Center announced its recommendations on October 19, supporting the SEC’s proposed Regulation Crypto Assets framework. The group asked for more generally defined rules for the distribution of tokens, platforms for trading and securities registration procedures.

The SEC introduced the proposal in August, offering two exemptions for qualifying cryptocurrency token sales. One allows offerings of up to USD 5 million in four years and the other USD 75 million per year.

Under its first recommendation, HPC wants the SEC to confirm that qualifying free token airdrops are not investments. The group stated that it does not consider these connections to be payment or the completion of a sanctions check.

Separately, HPC requested guidance for decentralized trading protocols and intermediaries handling token resales under the proposed exemptions.

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SEC Urged to Clarify Token Buybacks and Developer Protections

HPC has urged the regulator to separate out automated token buybacks from buybacks approved on a case-by-case basis by the developers. It suggested uniformity of definitions for controlling parties in the final regulations.

The group seeks protection of the networks that developers are still building. Under its plan, it would allow projects to receive legal protections without recognizing that the tokens they previously issued were investment contracts.

For secondary trading, HPC requested clearer rules allowing platforms without SEC registration to facilitate eligible transactions. The group noted volatility in these activities could limit token liquidity and participation in the network.

Previously, the organization urged European regulators to classify perpetual futures under existing derivatives rules.It submitted its request for “consistent treatment of financial products” involving blockchain to the Ministry of Finance on October 1.

SEC Faces October 20 Deadline for Crypto Rule Comments

HPC’s fifth recommendation concerns federal protections against separate state securities registration requirements. The organization wants those protections to remain in place after projects qualify for the proposed safe harbor.

The SEC’s proposal currently sets October 20 as the deadline for public comments. The commission has not yet accepted the recommendations and the proposed rules still have to be considered.

Meanwhile, the SEC and CFTC have been advancing their own cryptocurrency regulations in the wake of stalled federal market regulation.

Previously both agencies have advanced their own crypto regulatory initiatives for markets with tokenization and derivatives. The SEC will consider comments submitted before it decides to modify or adopt the proposed framework.

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