The company behind one of crypto’s busiest trading venues has formally asked the SEC to rewrite five parts of its proposed crypto rules — covering everything from free token giveaways to automated buybacks. The message from the Hyperliquid Policy Center: the current draft would push innovation offshore and leave developers personally exposed.
By Raj Patel | October 19, 2026
The Hook: Five Fixes for the SEC’s Crypto Rulebook
The Hyperliquid Policy Center (HPC) — the policy arm of the Hyperliquid ecosystem, home to one of the largest perpetual futures trading platforms in crypto — has submitted five proposals to the U.S. Securities and Exchange Commission, urging the regulator to revise its proposed framework for crypto assets, multiple outlets reported on October 19. The submission lands as the SEC works through its sweeping proposed rules for how digital assets should be regulated in the United States.
The five areas the HPC wants changed, according to its submission: rules covering airdrops (free token distributions), secondary trading of tokens, automated buybacks, safe harbors for new projects, and protections for developers. Individually these sound technical. Together, they decide whether the next generation of crypto projects gets built in America or somewhere else.
On-Chain Evidence: What Each Ask Actually Means
Here is the plain-English version of what the HPC is asking for, and why each item matters to regular investors:
- Airdrops — free token giveaways used to bootstrap communities. The HPC wants clarity that handing out tokens for free is not automatically treated as selling a security, which currently deters US projects from rewarding early users
- Secondary trading — when tokens change hands on exchanges after launch. The group wants decentralized trading venues treated with clear rules rather than legal ambiguity
- Automated buybacks — smart contracts that repurchase a project’s own tokens on schedule, similar to how public companies buy back shares. The SEC’s draft leaves these in a gray zone
- Safe harbors — grace periods letting new networks decentralize before full securities rules apply, so founders are not penalized during the vulnerable early phase
- Developer protections — shielding the people who write code from personal legal liability when others misuse their software
That last item cuts deepest for the industry. Under the current draft, developers can face personal exposure for tokens they helped create even years later — a risk that the HPC argues drives engineering talent to jurisdictions with clearer lines.
The Core Conflict: Investor Protection Versus Regulatory Certainty
The SEC’s instinct is protection: after years of scams, rug pulls and collapsed tokens, the regulator wants someone accountable when retail investors lose money. That instinct is not wrong. The HPC’s counterargument is about mechanism: making every token issuer and every developer legally liable does not stop fraud — it just stops legitimate builders from operating in the US at all, while actual fraudsters ignore the rules anyway.
The buyback question illustrates the tension perfectly. When a public company buys back its shares, there are clear rules — disclosure, timing windows, volume limits. Crypto projects increasingly run equivalent programs through smart contracts, which are public and automatic by design. The HPC argues that is an opportunity: codify fair buyback rules for tokens the way equity markets did, rather than leaving every automated repurchase in legal doubt.
It also matters who is asking. Hyperliquid is not a fringe lobby group — its trading venue processes some of the heaviest perpetual futures volume in the industry, and its policy center has engaged with regulators before. When operational players of this size formally ask for rule changes rather than quietly leaving the US market, regulators tend to read the submission closely.
Market Implications: The Rules That Shape the Next Cycle
For investors, SEC rulemaking is the slow-moving foundation under everything else. Clear airdrop rules would let US users actually receive token launches they are currently excluded from. Safe harbors would let new networks grow before facing full compliance costs, widening the pipeline of investable projects. Buyback clarity would make token supply programs more transparent — the kind of structural supply signal that equity investors have relied on for decades.
The alternative is what the industry has watched for years: ambiguity that funnels innovation and talent toward friendlier jurisdictions while American investors access the same assets through offshore venues with fewer protections. The HPC’s submission is one voice in a comment process crowded with banks, exchanges and trade groups — but its five asks map almost exactly onto the friction points developers complain about most.
The Verdict: What This Means for You
Nothing in your portfolio changes today because of a policy submission. What changes is the trajectory: if the SEC adopts even part of these five proposals — especially safe harbors and airdrop clarity — building and launching tokens in the US becomes materially easier, and the products available to American investors get broader and more transparent. If it ignores them, expect the offshore drift to continue.
Watch the SEC’s final framework and which of the five areas survive into the adopted rules. Rulemaking is unglamorous, but it is the layer of the market that determines who is allowed to build — and therefore what you will be able to invest in next.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
personal liability for code you shipped years ago is exactly why two devs i know already moved to lisbon. hope someone at the SEC actually reads this part
^ same. the developer protections matter more than the airdrop clarity imo, tools shouldnt inherit their users’ sins
The buyback comparison to corporate share repurchases only works if token buybacks get the same disclosure rules. Otherwise a scheduled buyback is just structured pumping with extra steps.
five proposals, zero chance any land before the comment period drama plays out. still, better to have the biggest perps venue at the table than shouting from outside
five whole sections they want rewritten and honestly the airdrop one is the big one. free tokens should not count as a securities sale, that ruling broke more than it fixed
The developer liability part gets overlooked. Under the current draft you can ship code and still be personally on the hook. No wonder teams incorporate offshore.
@Ravi exactly, the offshore line in the letter is not a threat, its just what already happens. been that way since the eth dev flight in the suit years
Automated buybacks being ambiguous in the draft is wild to me. TradFi companies do them constantly, and crypto venues are stuck guessing what counts as compliant