Hyperliquid Policy Center Files Five Changes to SEC's Crypto Rules as Comment Deadline Hits Today
Published October 20, 2026, 10:25 AM PKT. Based on the Hyperliquid Policy Center's October 19, 2026 comment letter to the U.S. Securities and Exchange Commission on proposed Regulation Crypto Assets, File No. S7-2026-27 (primary source), as described by PANews and KuCoin News on October 20, 2026 (secondary sources), with reporting from Crypto Briefing, crypto.news, CoinRepublic and financefeeds on October 19-20, 2026 (secondary sources). MABOnChain has not previously covered the Hyperliquid Policy Center's comment letter.
The Hyperliquid Policy Center, the policy arm tied to the Hyperliquid decentralized exchange, filed a comment letter with the U.S. Securities and Exchange Commission on October 19, 2026 urging the agency to adopt its proposed Regulation Crypto Assets framework with five changes covering token airdrops, secondary market trading, safe harbors, token buybacks and federal preemption. The filing arrived one day before the SEC's October 20 deadline for public comments on the framework, according to crypto.news.
The policy group broadly supports the proposal and urges its prompt adoption, KuCoin News reported, while arguing that the current draft leaves important questions unresolved for developers and token holders, particularly while networks are still being built.
The $5 million and $75 million exemptions
The SEC introduced Regulation Crypto Assets on August 18, TronWeekly reported, to create a tailored framework for certain crypto-related investment contracts. The proposal would let qualifying projects raise up to $5 million over four years under a startup exemption, or up to $75 million in any 12-month period under a separate fundraising exemption, both with disclosure obligations. The larger exemption would also require financial statements and ongoing reporting, while antifraud and antimanipulation protections would stay in force, CoinRepublic reported.
The draft also proposes a safe harbor addressing when crypto assets cease to be associated with investment contracts, alongside exemptions from certain state securities registration requirements, financefeeds reported. It builds on the SEC's March 2026 staff statement interpreting federal securities laws for crypto assets and activities, which covered airdrops, mining and staking, according to CoinRepublic.
Cointelegraph reported on October 19 that the agency drew about 140 comments over the 60-day consultation period, alpha-maven summarized. The framework has not been adopted, and the SEC has announced no final implementation date, financefeeds noted.
Five recommendations, one day before the deadline
The Hyperliquid Policy Center's letter asks the SEC to codify how eligible airdrops are determined, using a standard of "clear and specific consideration" for deciding what counts as a monetary investment, KuCoin News reported. It wants the final rule text to state that claiming steps such as connecting a wallet, completing know-your-customer checks or passing sanctions screening do not count as payment for tokens, a point Crypto Briefing also highlighted. The group wants the rule to cover announced and recurring airdrops and to apply retroactively to past distributions, according to NS3.AI reporting carried on Binance Square.
On secondary markets, the group asked the SEC to clarify the status of intermediaries and to let tokens issued under the exemptions trade immediately outside the registered framework, recommending exemptions for such transactions and platforms under Section 36 of the Exchange Act, KuCoin News reported.
For the safe harbor, the policy center wants using it to not imply any admission that a token previously involved an investment contract or that the project was an issuer, and for protection to extend to projects still under development, KuCoin News reported. It also asked for an option letting projects declare that a token was not a security from the outset.
The letter asked the SEC to fold the Division of Corporation Finance's recent repurchase guidance into the rules, unify the concept of a "central party" and distinguish automated buybacks executed under predefined rules from discretionary buybacks controlled by developers, KuCoin News reported. Finally, it called for durable federal preemption: issuers meeting the safe harbor conditions should be able to opt out of reporting obligations or file a simplified annual certification instead, keeping the exemption from state registration requirements effective after the safe harbor is satisfied, according to KuCoin News and PANews.
Airdrops without payment are not investment contracts
The airdrop recommendation is the centerpiece. The policy center argues that the receipt of free tokens distributed as rewards for on-chain activity, where users invest no funds and take on no financial risk, should not be deemed an investment of money under the investment-contract analysis, CoinRepublic reported. It wants the SEC to adopt a "tangible and definable consideration" test so that administrative claim procedures cannot be reclassified as payment.
The argument matters because many crypto projects distribute tokens to users who have participated in a network, supplied liquidity to protocols or run validators, the group wrote. Without a clear rule, developers cannot know whether a routine reward program makes them securities issuers.
A deadline during a shutdown
The comment period closes while the SEC is operating under its shutdown operations plan with only emergency staff, as MABOnChain reported on October 18. Public comment deadlines proceed on schedule regardless, and the Hyperliquid Policy Center's timing, one day before the cutoff, puts its recommendations among the last filings the agency will consider before drafting a final rule.
Industry reaction to the framework has been broadly positive, though legal experts quoted by alpha-maven warned that rules built through administrative action offer less legal stability than legislation passed by Congress, where comprehensive digital asset market legislation remains delayed.
This article is news reporting and is not investment advice.
Sources
- Hyperliquid Policy Center, October 19, 2026 comment letter to the U.S. Securities and Exchange Commission on proposed Regulation Crypto Assets, File No. S7-2026-27, primary source (as described by PANews and KuCoin News): five recommendations covering airdrops without tangible consideration, secondary market trading and intermediaries, safe harbor protections for projects in development, automated versus discretionary token buybacks, and durable federal preemption of state registration requirements
- Crypto Briefing, October 19, 2026, secondary source: the five recommendations, the call to exclude wallet connection, know-your-customer checks and sanctions screening from consideration, clearer secondary trading rules and the October 20 comment deadline
- financefeeds, October 20, 2026, secondary source: the October 19, 2026 comment letter, support for the framework, the $5 million over four years and $75 million per 12 months exemptions, the safe harbor and state registration provisions, the October 20 deadline, and the framework's unadopted status
- crypto.news, October 19, 2026, secondary source: the October 19 announcement, the five recommendations, the exemption figures, and the October 20 deadline
- PANews, October 20, 2026, secondary source: the October 19 letter, the five amendments, the $5 million and $75 million exemption figures, and state registration preemption surviving safe harbor qualification
- KuCoin News, October 20, 2026, secondary source: File No. S7-2026-27, the five recommendations in detail including "clear and specific consideration," Section 36 Exchange Act exemptions, no-admission safe harbor language, repurchase guidance and simplified annual certification
- alpha-maven (summary of Cointelegraph), October 20, 2026, secondary source: about 140 comments over the 60-day consultation, the SEC's August proposal, the agency's effort to build a framework through administrative rules while congressional legislation stalls, and legal experts' stability caveats
- CoinRepublic, October 19, 2026, secondary source: the "tangible and definable consideration" test, antifraud and antimanipulation protections retained, and the March 2026 SEC staff statement on airdrops, mining and staking
- TronWeekly, October 20, 2026, secondary source: the August 18 proposal date, the exemption structure with disclosures and financial-statement requirements
- NS3.AI via Binance Square, October 20, 2026, secondary source: retroactive application of airdrop rules and coverage of announced and recurring airdrops
MABOnChain Daily Brief
The key crypto and markets stories in one short, plain-language email. Free. Unsubscribe any time.
Prefer chat? Join us on Telegram Watch on YouTube
Keep reading
BlackRock Files for iShares Bitcoin Managed Protection ETF, Capped Upside on IBIT With Downside Buffer
BlackRock's iShares Trust filed with the SEC on October 19, 2026 for the iShares Bitcoin Managed Protection ETF, ticker PBIT, seeking upside exposure to the iShares Bitcoin Trust (IBIT) up to an approximate cap while offering downside protection. The strategy buys bitcoin options in three tranches, sells options to offset the purchase cost, and invests in fixed-income products whose interest income hedges the option costs. IBIT holds more than $65 billion in assets, making it the largest bitcoin ETF. Bloomberg analyst James Seyffart noted it is BlackRock's third bitcoin ETF filing and that the firm still offers only bitcoin and Ethereum products.
Tether CEO Ardoino Fires Back at Blumenthal Senate Probe, Claims Iran USDT Volumes Down 94%
Tether CEO Paolo Ardoino responded on October 19, 2026 to Senator Richard Blumenthal's Senate Iran sanctions probe, claiming on X that since 2023 Tether froze flagged addresses on average four weeks before OFAC and Israel's NBCTF officially designated them, that it acted before Chainalysis labeled the addresses 99% of the time, and that its enforcement work drove a 94% decline in Iran-linked stablecoin volumes. The figures are company assertions with no independently verified dataset. The September 28 report from Democratic staff of the Senate Permanent Subcommittee on Investigations had accused USDT of being a significant financial lifeline for Iran's shadow banking network.
World Liberty's USD1 Stablecoin Sheds $400 Million in Two Weeks as Redemptions Mount
World Liberty Financial's USD1 stablecoin has shed more than $400 million of its market capitalization in two weeks, falling about 9.1% from $4.43 billion on October 6 to roughly $4.02 billion on October 19, driven by concentrated redemptions on Ethereum and BNB Chain, including nearly $200 million from a single unidentified address on BNB Chain. The dollar peg held between $0.998 and $1.000, proof-of-reserves data showed about $4.01 billion in backing assets, and the 11.45% supply drop outpaced rival dollar-pegged stablecoins ahead of a planned issuer transition.
Coinbase and Thunes Partner to Bring Stablecoin Payouts to 140 Countries' Local Banks and Wallets
Coinbase and Thunes announced a strategic partnership on October 19, 2026, at Money20/20 USA in Las Vegas: Coinbase will power Thunes' stablecoin infrastructure while Thunes' Direct Global Network plugs Coinbase payouts into local clearing systems, mobile wallets and bank accounts across more than 140 countries for supplier payments, gig-worker payouts and remittances. No financial terms, timeline, supported stablecoins or consumer availability were disclosed.
LayerZero (ZRO) Rallies 8% Ahead of $45 Million Token Unlock
LayerZero's ZRO token climbed about 8% to $1.909 on October 19, 2026, one day before a scheduled token unlock that DeFiLlama's token unlock tracker valued at about $44.77 million. The rally, which put ZRO on CoinGecko's daily trending list, defies the usual pattern of unlocks weighing on prices; the token remains well below its $7.47 record while fighting a $292 million lawsuit from KelpDAO.
Crypto.com and Novig Sue Missouri to Block Sports Prediction Market Crackdown
Crypto.com's North American Derivatives Exchange and Novig sued Missouri officials in federal court on October 16, 2026, arguing that federal commodities law gives the CFTC exclusive jurisdiction over their sports event contracts and preempts the state's bid to regulate them as unlicensed gambling. The suits follow cease-and-desist letters Attorney General Catherine Hanaway sent in September to six prediction market operators, with a 30-day compliance window.
Justin Sun Sold 80% to 90% of His Ethereum Near $4,000 and Pivoted to Nvidia
TRON founder Justin Sun disclosed in an interview published October 16, 2026 that he sold 80% to 90% of his Ethereum, mostly between $3,600 and $4,000, and moved much of the proceeds into U.S. equities, with Nvidia his largest single stock holding. Before the reduction, Ethereum had been his largest cryptocurrency position. He now keeps about 20% of his original ETH as a core asset, says he has no plans to buy back, and left his core Bitcoin untouched in cold storage over concerns about quantum computing and AI threats to cryptography. The sale itself happened months ago, not this week.
Covenant x402 Tops CoinGecko Trending as 138M Agent Payments Put x402 Rails on the Map
Covenant x402 (COVENANT) became CoinGecko's most-searched coin on October 19, 2026, jumping about 70% in 24 hours to roughly $0.027 on about $20 million of volume. The token claims to build infrastructure for AI agents on Robinhood Chain, priced in USDG per request, and rides a narrative lit up by Chainalysis' report that AI agents made 138 million payments through x402 on Base. No project-specific catalyst was announced in the last 48 hours, so the rally is attention and search driven.
Mt. Gox Extends Creditor Repayment Deadline to October 2027, Keeping 34,500 BTC Off the Market Another Year
Rehabilitation trustee Nobuaki Kobayashi announced on October 16, 2026 that Mt. Gox's creditor repayment deadline moves from October 31, 2026 to October 31, 2027, with Tokyo court approval. About 34,500 BTC, worth roughly $2.9 billion, remains in trustee-controlled wallets while base, early lump-sum and intermediate repayments are largely completed for creditors with paperwork in order.
Turkey Confirms HEX Founder Richard Heart's Arrest, Says Police Seized $7.15M and Six Cold Wallets
Turkish Justice Minister Akin Gurlek confirmed on October 17, 2026 that HEX founder Richard Heart was detained in Istanbul on October 14, saying police seized $7.15 million in cash and six cold wallets across 15 addresses. His wife and three bodyguards were also detained; Turkey's MIT intelligence agency backed the operation run on an Interpol Red Notice tied to alleged $1 billion fraud.