Hyperliquid Policy Center Submits Five Revision Suggestions on SEC's Cryptocurrency Regulation Proposal

On October 20, according to a comment letter submitted by the Hyperliquid Policy Center (HPC) to the U.S. Securities and Exchange Commission (SEC) on October 19, HPC generally supports the SEC's proposed rules on crypto asset regulation (File No. S7-2026-27) and urges their prompt approval. The proposal includes a $5 million startup exemption (for four years), a $75 million fundraising exemption (per 12 months), an investment contract safe harbor, and state-level advance applicability provisions for "qualified purchasers." HPC also puts forward five recommendations:

1. Airdrops: Incorporate airdrop analysis into the final rule text and use "clear and specific consideration" as the standard for determining "monetary investment";
2. Secondary Markets: Clarify the status of secondary market trading and intermediaries, allowing assets issued under exemptions to trade immediately outside the registration framework, and recommend exempting relevant transactions and platform recognition under Section 36 of the Exchange Act;
3. Safe Harbor: Its use should not be deemed an implicit admission of the existence of an investment contract or issuer status, and protections should extend to periods during which critical management activities are ongoing;
4. Buybacks: Incorporate recent buyback guidance from the SEC's Division of Corporation Finance into the rules, unify the concept of "centralized entity", and distinguish between programmatic buybacks and discretionary buybacks;
5. Federal Advance Applicability: Issuers meeting safe harbor conditions can opt out of reporting obligations or adopt a simplified annual certification to avoid state regulatory intervention.

HPC stated that without the aforementioned adjustments, the practical impact of the proposal may fall short of SEC expectations, and insufficient liquidity in secondary markets could render the proposal's benefits "quite limited".