In a separate submission, the Hyperliquid Policy Center urged the SEC to broaden its proposed safe harbor, arguing that it could come too late in a project’s development.
The group called for clearer protections for airdrops that reward network participation, as well as guidance on token buybacks
Hyperliquid also warned that the proposal “fails to provide clarity” on whether unregistered intermediaries can facilitate token trading or whether tokens can trade freely through onchain protocols. It urged the SEC to address secondary-market transactions directly rather than leaving exchanges and decentralized trading venues facing regulatory uncertainty. While industry participants sought changes to the proposed rules, former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners took a different position altogether.
In an Oct. 16 comment letter, they urged the commission to withdraw the proposal entirely, arguing that it exceeds the agency’s statutory authority and would weaken investor protections. Stark and Reiners said that existing securities laws and the Supreme Court’s Howey test already provide a framework for regulating crypto offerings. They argued that the fundraising exemptions would weaken investor protections, while the proposed safe harbor would allow issuers to effectively remove their tokens from securities oversight through self-certification.