Hyperliquid: HPC Urges the SEC to Adopt Regulation Crypto Assets with Five Refinements For years, people building crypto networks in the United States could not reliably tell when the securities laws applied to the tokens they created. The governing test comes from a 1946 Supreme Court case about Florida citrus groves, and applying it to software networks produced a decade of uncertainty. Many projects responded by launching abroad or by excluding Americans from their token distributions. The Securities and Exchange Commission (SEC), the agency that oversees U.S. securities markets, has spent 2026 working to give crypto entrepreneurs much-needed clarity. In March, the SEC issued an interpretation explaining how the securities laws apply to several types of token distributions, including airdrops (distributions of tokens to network participants’ wallets, typically based on past activity and made without a sale). In August, the SEC proposed Regulation Crypto Assets, which would permit token offerings of up to $5 million over four years under a startup exemption and up to $75 million in any 12-month period under a fundraising exemption. A new safe harbor would confirm when a token is no longer tied to an investment contract, and tokens sold under the exemptions, along with certain resales, would be exempt from state registration requirements. Today, HPC filed a comment letter supporting Regulation Crypto Assets and urging the SEC to adopt it. Our comment makes five recommendations to help the SEC deliver the clarity it intends. The March interpretation recognizes that an airdrop, where a recipient gives nothing in exchange for a token, involves no investment of money. Airdrops let developers reward early users, spread ownership across a broad base of participants, and bootstrap the network effects a new system needs. A recipient who earns tokens by using a network, running a validator, or supplying liquidity has neither funded the project’s enterprise nor put money at risk of loss, so no investment contract forms and the U.S. securities laws do not attach. Our comment asks the SEC to write that analysis into the rule text, anchored to the “tangible and definable consideration” the Supreme Court has identified as necessary to create an investment contract. Administrative steps a recipient completes to collect an airdrop should not count as payment for the tokens. Recipients often must connect a wallet or clear sanctions screening before they receive their tokens. Under the March interpretation, activity a recipient engaged in before an airdrop is announced does not count as payment, as long as the recipient does not have to complete further tasks after the announcement. That limit makes sense where recipients effectively pay for their tokens by performing services for the project. Delivery steps serve no such purpose, and treating them as payment would penalize projects with careful compliance controls. Our comment asks the SEC to confirm that these steps do not turn an airdrop into an investment of money. Once tokens reach users, holders need to know they can trade them. Resales of a token tied to an investment contract would remain securities transactions, and the proposal does not yet say whether, or how, onchain protocols and other persons not registered with the SEC may facilitate those trades. The SEC’s own economic analysis notes that the proposal’s benefits depend on whether a liquid secondary market for a token develops and “may be fairly small” if one does not. Our comment asks the Commission to provide that clarity when the SEC adopts the rule, using the authority and tools the Commission already has. The proposal’s new safe harbor requires a certification that many projects cannot make. A token reaches maturity when it no longer depends on its developers, and the safe harbor is meant to confirm that transition. To use it, a project must certify that it has completed its essential managerial efforts (the project’s work on which token holders depend for profit), and some projects will read that filing as an admission that the token was once subject to an investment contract. A project whose counsel concluded that no investment contract ever existed cannot reasonably certify otherwise, and making that tacit admission exposes the project to legal liability. The safe harbor also becomes available only after development ends, although legal uncertainty is greatest while a project is still building. Who counts as the issuer of a token needs one definition across the rule. SEC staff has issued guidance on token buybacks, and our comment asks the SEC to carry that guidance into the final rule or its adopting release, to use a single “central party” concept throughout, and to distinguish buybacks that run automatically under published rules from buybacks a party decides on case by case. Our comment asks the SEC to take five steps: Codify the airdrop analysis in the final rule text, and anchor it to whether a recipient gave tangible and definable consideration. Address secondary trading and intermediary status directly, so that tokens distributed under the exemptions can trade freely from the outset. The SEC should provide clarity for persons and onchain protocols that facilitate secondary market trading. Make the safe harbor usable without a tacit admission of prior investment-contract or issuer status, and extend its protection to projects whose essential managerial efforts are still underway. Filers should be able to certify instead that their token was never tied to an investment contract in the first place. Incorporate the SEC staff’s buyback guidance into the final rule or adopting release, harmonize the “central party” concept, and distinguish programmatic buybacks from discretionary ones. Dispersed validators, network participants, and users should not count as a controlling “group” merely because their incentives align. Make federal preemption durable, so that it survives a project’s satisfaction of the safe harbor. As proposed, preemption would end at that point, exposing tokens to registration regimes in more than 50 jurisdictions and giving projects a reason to delay finishing their work. Developers who launched abroad or turned American users away did so because they could not tell how U.S. law applied to them. A final rule with these refinements would give them a reason to build here. We are focused on ensuring that Americans can access onchain markets under U.S. rules, and we will continue engaging with the SEC and its staff as the Commission finalizes the rule. Read our full comment letter here.