# Hyperliquid Urges SEC to Fix Five Flaws in Draft Crypto Rules

- URL: https://stocks.freetheai.org/news/hyperliquid-urges-sec-to-fix-five-flaws-in-draft-crypto-rules-637dd7
- Published: 2026-10-19T19:25:45Z
- Category: regulation; sentiment: neutral; impact: medium
- Symbols: [COINBASE:HYPEUSD](https://stocks.freetheai.org/symbols/COINBASE-HYPEUSD)
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The Hyperliquid Policy Center submitted an official comment letter to the U.S. Securities and Exchange Commission regarding the regulator's draft Regulation Crypto Assets. While backing the broad goal of regulatory reform, the organization warned that the current proposal creates legal risks for Web3 startups. The SEC framework would permit firms to raise up to $75 million annually under simplified rules and offer a safe harbor for mature tokens, but industry representatives argue the rules remain detached from operational realities.

Hyperliquid (COINBASE:HYPEUSD) outlined five essential changes required to make the framework workable. Key demands include explicitly excluding free token airdrops from investment contract definitions, allowing creators to state their assets were never securities, protecting initial trading on decentralized exchanges, and extending federal preemption over state regulations indefinitely. Hyperliquid currently bars U.S. residents from its on-chain futures trading platform to avoid legal friction, making clear federal rules vital for domestic market participation.

Market participants will monitor whether the SEC incorporates these policy recommendations into its final regulatory text. Investors should also watch for ongoing legislative scrutiny, as congressional committees continue oversight of digital asset platforms while token regulators finalize national standards.

## Key points

- Hyperliquid Policy Center called on the SEC to revise five areas in its proposed Regulation Crypto Assets rules.
- Proposed SEC rules allow crypto startups to raise up to $75 million annually and grant safe harbor status to mature tokens.
- Hyperliquid requested that token airdrops be excluded from securities laws and that DEX trading be legally protected.
- The policy center requested permanent federal immunity from state oversight for approved digital asset projects.

## Questions and answers

### What changes did Hyperliquid request from the SEC?

Hyperliquid requested five fixes to proposed SEC rules, including exempting token airdrops from securities laws, permitting DEX trading from launch, and making federal immunity from state oversight permanent.

### What is the SEC Regulation Crypto Assets proposal?

The proposal allows crypto startups to raise up to $75 million a year under simplified rules and provides safe harbor protection for mature tokens from regulatory prosecution.

### Why does Hyperliquid block U.S. users?

Hyperliquid blocks U.S. residents from its on-chain futures platform due to strict and uncertain U.S. crypto regulations, despite facing no active lawsuits or fines from regulators.