The U.S. Securities and Exchange Commission (SEC) is working on a new rule called “Regulation Crypto Assets,” and not everyone is happy with the current draft. The Hyperliquid Policy Center (HPC), a new advocacy group tied to the popular decentralized exchange Hyperliquid, has filed a formal comment letter asking the SEC to go back to the drawing board on several key points.
At the heart of the issue are three activities that are core to how crypto markets work today: airdrop, token buybacks, and secondary trading. Without clear rules, projects and investors could find themselves in regulatory limbo, not knowing whether a simple token giveaway or a buyback program might land them in trouble with U.S. regulators.
Who Is the Hyperliquid Policy Center?
Hyperliquid is one of the fastest-growing decentralized exchanges (DEXs) in crypto, known for offering high-speed perpetual futures trading directly on-chain. Think of a DEX like Hyperliquid as a crypto trading app that runs without a middleman β no bank, no broker, just smart contracts doing the work. Popular platforms like Kraken are centralized exchanges, while Hyperliquid operates in the decentralized finance (DeFi) space.
The HPC was created to give the project a louder voice in Washington. Its mission is to push for clear, fair, and workable crypto regulation in the United States. By filing comment letters with the SEC, the group hopes to shape the final version of Regulation Crypto Assets before it becomes law.
Why the SEC’s Proposed Rules Are Causing Concern
The SEC’s proposed Regulation Crypto Assets is meant to define which digital assets count as securities (financial assets similar to stocks or bonds that come with strict legal obligations) and how they should be regulated. While the goal sounds reasonable on paper, the HPC argues the draft is too vague in several critical areas.
1. Airdrops Need Clearer Guidelines
An airdrop is when a crypto project sends free tokens to users, usually to reward early supporters or boost awareness. It’s basically a promotional giveaway, and it’s a hugely popular marketing tool in the crypto world. The problem? The SEC’s proposal doesn’t clearly explain whether airdrops could be treated as securities offerings.
This matters because if a token given away for free is suddenly considered a security, the project handing it out could face serious legal consequences. The HPC wants the SEC to spell out exactly when an airdrop is and isn’t a securities offering.
2. Token Buybacks Remain in a Gray Zone
A token buyback is when a project uses its own funds to purchase its tokens from the market. This is a common practice in both traditional finance (think of stock buybacks) and crypto. Buybacks can help support a token’s price and show confidence in the project.
But once again, the SEC’s draft leaves too much room for interpretation. Should token buybacks be treated like corporate stock buybacks? Or do they cross a regulatory line? The HPC is pushing for explicit answers.
3. Secondary Trading Rules Are Missing
Secondary trading refers to any trade that happens after the initial token sale β basically, everyday buying and selling on exchanges. This is the core activity of crypto markets, and it affects everyone from casual traders to institutional investors.
The HPC wants the SEC to clearly define which secondary trades fall under securities law and which don’t. Without this clarity, exchanges and traders may be forced to guess, and getting it wrong could mean fines or lawsuits.
Why This Matters for Crypto Investors
You don’t need to be a lawyer or a policy expert to feel the impact of these proposed rules. If you’re holding tokens, trading on a DEX, or even claiming small airdrops, the SEC’s final decision could affect what you can do with your assets, and how projects interact with you.
For example, if a project becomes afraid that running an airdrop might be classified as an unregistered securities offering, it might simply stop doing airdrops altogether. That’s less free money in your pocket and fewer opportunities to discover new projects early.
Similarly, if buybacks are too heavily restricted, projects lose one of their main tools for supporting token prices and rewarding long-term holders. And if secondary trading rules are unclear, exchanges β especially smaller or decentralized ones β might pull back from the U.S. market entirely, limiting your trading options.
On a personal note, regulatory uncertainty is also a good reminder to take self-custody seriously. If you hold your own tokens in a hardware wallet like Ledger, you’re not dependent on any exchange staying open or following new rules.
What’s Next in the Regulatory Process
The SEC is currently reviewing public comments on its proposed rule. The HPC’s letter joins a growing pile of feedback from crypto companies, law firms, and industry groups. While there’s no set deadline for the final rule, the SEC is expected to revise the proposal based on the feedback it receives.
European readers should know that regulatory clarity is moving differently across the Atlantic. Exchanges like Bitvavo operate under Europe’s MiCA framework, which already provides more defined rules for digital assets. That contrast is one reason why some U.S. crypto projects are pushing for clearer domestic guidelines.
The Bigger Picture: Regulation Is Coming, Ready or Not
The Hyperliquid Policy Center’s push is part of a much larger conversation about how crypto should be regulated. The industry isn’t necessarily fighting against rules β it’s fighting for good rules. Vague regulations hurt innovation, scare away talent, and push activity offshore to jurisdictions with friendlier frameworks.
The HPC’s core message to the SEC is simple: be specific. Tell us exactly how airdrops, buybacks, and secondary trading will be treated. The more clarity, the better β for projects, for investors, and for the long-term health of the U.S. crypto market.
Conclusion
The Hyperliquid Policy Center’s comment letter is a reminder that crypto regulation isn’t just a topic for lawyers. It affects every trader, holder, and builder in the space. As the SEC works through the feedback on its proposed Regulation Crypto Assets, keep an eye on how airdrops, buybacks, and secondary trading rules evolve. Staying informed today means you’ll be ready for whatever rules come tomorrow β and you’ll know exactly how to protect and grow your portfolio in any regulatory environment.
