The Hyperliquid Policy Center has welcomed the US Securities and Exchange Commission’s effort to clarify how federal securities laws apply to digital assets. However, the organization believes the SEC’s proposed Regulation Crypto Assets framework needs five changes before it can work effectively for token developers and crypto markets.
For businesses building blockchain networks and digital assets, regulatory clarity is essential. Clearer rules can encourage investment, reduce compliance uncertainty and support responsible innovation. At the same time, requirements that are too broad or burdensome may push smaller projects away from the US market.
## What Is Regulation Crypto Assets?
Regulation Crypto Assets is the SEC’s proposed framework for classifying and regulating crypto assets under US securities law. A framework in this context is simply a structured set of rules explaining which activities may require federal oversight.
The distinction can be significant because securities regulations may impose requirements involving disclosures, investor protection, market conduct and registration. Crypto projects may also face different obligations depending on whether a token is distributed, traded, marketed or used to operate a network.
Hyperliquid broadly supports the SEC’s attempt to provide guidance. In a comment published on October 19, the group said the proposal is a constructive step while warning that several details could create unnecessary barriers.
Hyperliquid’s Five Recommended Changes
The Hyperliquid Policy Center asked the regulator to revise the proposed framework in five areas. Its main concern is that rules around token distributions and trading could unintentionally restrict legitimate network activity and development.
1. Protect Routine Token Distributions
Token distributions are one of the most common ways a blockchain project introduces its native asset to users. Developers may distribute tokens through an airdrop, network rewards, ecosystem incentives or other mechanisms designed to encourage adoption.
Hyperliquid wants the SEC to distinguish between different types of distributions. Not every transfer should be treated in the same way merely because a token has economic value. The framework should provide a clearer path for developers to reward early users, fund open-source development and grow decentralized ecosystems without triggering unnecessary legal uncertainty.
2. Avoid Restricting On-Chain Trading
Decentralized finance, or DeFi, refers to financial services built on blockchain networks rather than operated by a traditional intermediary. DeFi users can trade assets through automated systems called decentralized exchanges, often without giving custody of their funds to a central platform.
The SEC’s rules need to account for how these systems operate. Hyperliquid argues that on-chain trading should not be subjected to requirements that only make sense for centralized companies. A software protocol is not automatically the same thing as a brokerage or investment platform.
3. Give Developers Clear Compliance Boundaries
Token developers often work across borders and may not fit neatly into a traditional US corporate structure. Clear compliance boundaries would help teams understand which activities are regulated, which exemptions may apply and what level of documentation is expected.
This is especially important for open-source projects that distribute code rather than directly operating a centralized service. Without practical guidance, developers may avoid working on publicly available networks simply because the legal responsibilities are unclear.
4. Make the Framework Work for Multiple Token Types
The crypto market includes stablecoins, governance tokens, network tokens, security-like assets and many other digital assets. Each can have different functions and risks, so a single approach may not fit every project.
Hyperliquid wants the SEC to create a more flexible classification system. A token used to access a network may need different treatment from an asset designed to represent a claim on revenue, profit or ownership rights. The rule should focus on how an asset functions and how it is marketed rather than relying only on broad labels.
5. Reduce Barriers to Market Participation
Regulatory rules should protect investors while still allowing legitimate projects to launch and operate. Hyperliquid warns that overly prescriptive requirements could make the US less competitive as a center for blockchain development.
The group’s position reflects a recurring debate in crypto policy: how can regulators prevent fraud without treating every digital asset or decentralized application like a traditional security? A balanced framework should be firm where investor risks are high and flexible where ordinary technology activity creates limited additional risk.
Why SEC Guidance Matters for the Crypto Industry
US regulatory guidance can influence the wider digital asset industry because many global projects seek access to American users, liquidity and developers. A predictable rule may make it easier for companies to plan launches, raise capital and build products with confidence.
For investors, clearer rules could also improve due diligence. If a project can explain its token’s function, distribution model and trading environment, users may be better equipped to assess risks. However, regulatory classification is not a guarantee that an asset is safe. It is only one part of a complete investment evaluation.
People who trade or hold digital assets should still protect their accounts and verify information independently. Hardware wallets such as Ledger devices can help store supported private keys offline, while established trading platforms such as Kraken and Bitvavo provide regulated ways to access supported assets. Users should compare fees, security features and legal availability in their own country before depositing funds.
The Main Takeaway
Hyperliquid’s response is not a rejection of the SEC’s proposed crypto framework. It is a request to make the rules more practical for token developers, decentralized markets and projects operating across borders.
The five requested changes focus on token distributions, on-chain trading, developer certainty, asset classification and market access. The final version could shape how US securities law applies to crypto markets for years to come, making it important for policymakers, developers and users to follow the rulemaking process closely.
Actionable conclusion: Before investing in a new token project, review its official documentation, token distribution plans and regulatory status. Follow the SEC’s final rule and credible legal analysis, use reputable platforms, enable strong account security and keep the long-term risk of volatile crypto assets in mind.
