Hyperliquid Policy Center Tells SEC: Airdrops Aren't Investments, But Please Define Them Anyway 🗳️

The Hyperliquid Policy Center has submitted five recommendations urging the U.S. Securities and Exchange Commission to revise portions of its proposed Regulation Crypto Assets framework, including clarifications on token airdrops, automated buybacks, secondary trading, and legal protections for developers. The submission was announced October 19 as the comment window closes on October 20 for the SEC's crypto rules introduced in August.

The proposed framework includes two exemptions for qualifying token sales, permitting offerings of up to $5 million over four years under one provision and up to $75 million per year under the other. In its first recommendation, the Hyperliquid Policy Center asked the SEC to confirm that qualifying free token airdrops do not constitute investment contracts and are not payments or sanctions-related screening activities. The group also requested guidance for decentralized trading protocols and intermediaries facilitating token resales under the proposed exemptions.

On buybacks, the Hyperliquid Policy Center urged the regulator to distinguish automated token buybacks executed by protocol code from buybacks approved case-by-case by developers, recommending uniform definitions for controlling parties. The center additionally called for explicit legal protections for developers building decentralized networks, while stating that it does not admit any prior violations of securities laws.

The recommendations cover token distribution rules, trading platform requirements, and securities registration procedures. The Hyperliquid Policy Center said it supports the broader direction of the SEC's framework but wants narrower, more generally defined terms across the proposal before any final rule is adopted.