Hyperliquid Policy Center urges SEC to clarify airdrop and token buyback rules

The Hyperliquid Policy Center (HPC) has urged the US Securities and Exchange Commission (SEC) to adopt its proposed Regulation Crypto Assets framework with five revisions aimed at providing greater legal clarity for crypto developers and token holders.

In an October 19 comment letter, the advocacy group supported the SEC’s proposal, which would allow qualifying crypto projects to raise up to $5 million over four years under a startup exemption or up to $75 million annually under a separate fundraising exemption.

The framework, introduced in August, would also establish a safe harbor for tokens no longer associated with investment contracts and provide exemptions from certain state securities registration requirements.

Hyperliquid Policy Center seeks clearer rules for airdrops and token trading

HPC recommended that the SEC formally establish that token airdrops do not constitute securities transactions when recipients provide no tangible consideration in exchange.

The group argued that administrative requirements, such as connecting a wallet or completing sanctions screening, should not be treated as payment for tokens.

It also called for clearer rules governing secondary market trading, including whether decentralized protocols and other intermediaries can facilitate transactions involving tokens distributed under the proposed exemptions.

Another recommendation seeks to expand the SEC’s proposed safe harbor to protect projects still undergoing development without requiring them to acknowledge that their tokens previously constituted investment contracts.

HPC also urged regulators to distinguish automated token buybacks governed by predefined rules from discretionary purchases controlled by developers or other centralized parties.

Finally, the group called for permanent federal preemption of certain state registration requirements, warning that the current proposal could expose mature crypto projects to additional state regulations once they qualify for the safe harbor.

The recommendations come as the SEC moves toward finalizing its crypto regulatory framework, with the public comment period scheduled to close on October 20.

HPC argued that greater legal certainty could encourage crypto developers to launch projects in the US rather than relocate overseas or exclude American users.