{"id":31365,"date":"2026-06-10T06:15:32","date_gmt":"2026-06-10T06:15:32","guid":{"rendered":"https:\/\/bitunikey.com\/news\/hyperliquid-and-paradigm-warn-genius-act-rule-could-hurt-defi\/"},"modified":"2026-06-10T06:15:39","modified_gmt":"2026-06-10T06:15:39","slug":"hyperliquid-and-paradigm-warn-genius-act-rule-could-hurt-defi","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/hyperliquid-and-paradigm-warn-genius-act-rule-could-hurt-defi\/","title":{"rendered":"Hyperliquid and Paradigm warn GENIUS Act rule could hurt DeFi"},"content":{"rendered":"<p><\/p>\n<div class=\"post-detail__content blocks\">\n<p class=\"is-style-lead\">The Hyperliquid Policy Center and Paradigm have asked the U.S. Treasury to narrow parts of its proposed anti-money laundering rules for stablecoin issuers.\u00a0<\/p>\n<div id=\"cn-block-summary-block_ab589395faa6d9e8d6dd69cdad0c45af\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>Hyperliquid and Paradigm want secondary-market duties narrowed because issuers cannot identify every DeFi transaction participant.<\/li>\n<li>Treasury\u2019s proposal requires stablecoin issuers to maintain AML programs and block transactions violating U.S. law.<\/li>\n<li>The groups warn strict rules could shift regulated stablecoin liquidity toward permissioned or offshore alternatives.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>The groups said the draft could place duties on issuers for transactions they cannot control.<\/p>\n<p>Their June 9 <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/hyperliquidpolicy.org\/blog\/hpc-and-paradigm-file-joint-comment-on-treasury%E2%80%99s-genius-act-proposed-rule\" target=\"_blank\" rel=\"nofollow\">letter<\/a> supports stronger checks where issuers deal with customers. However, it argues that the same approach should not automatically cover transfers through wallets, decentralized exchanges and smart contracts.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h2 class=\"wp-block-heading\"><strong>Groups challenge secondary-market compliance duties<\/strong><\/h2>\n<p>FinCEN and the Office of Foreign Assets Control proposed the rule in April to implement the GENIUS Act. It would require permitted stablecoin issuers to maintain anti-money laundering and sanctions programs.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-x wp-block-embed-x\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">In a second regulatory front today, <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/x.com\/paradigm?ref_src=twsrc%5Etfw\">@Paradigm<\/a> filed a joint comment with <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/x.com\/HyperliquidPC?ref_src=twsrc%5Etfw\">@HyperliquidPC<\/a> on Treasury\u2019s AML and sanctions rules for stablecoin issuers under GENIUS. FinCEN and OFAC got a lot right, but work remains to provide legal certainty to both issuers and developers. <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/t.co\/rkiBHda1HX\">pic.twitter.com\/rkiBHda1HX<\/a><\/p>\n<p>\u2014 Stefan Schropp (@SPSchropp) <a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/x.com\/SPSchropp\/status\/2064368846773837890?ref_src=twsrc%5Etfw\">June 9, 2026<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<p>The proposal also requires issuers to keep systems that can block, freeze or reject transactions that breach U.S. law. Hyperliquid and Paradigm said those duties need clearer limits when tokens circulate outside an issuer\u2019s service.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThe same principle should guide the agencies\u2019 implementation of AML and sanctions requirements,\u201d the groups said.<\/p>\n<\/blockquote>\n<p>They argued that primary-market activity gives issuers customer records and control over issuance and redemption. Secondary markets often show only wallet addresses, transaction values and contract interactions.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Letter warns regulated stablecoins could leave DeFi<\/strong><\/h2>\n<p>The groups said the proposed approach could make issuers responsible for smart contract activity even when they have no relationship with users. They warned that such exposure could discourage issuers from supporting open networks.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cIssuers are subject to strict liability for transactions they cannot meaningfully police,\u201d the letter said.<\/p>\n<\/blockquote>\n<p>According to the filing, issuers may respond by limiting tokens to permissioned systems where participants undergo identity checks. The groups said that outcome could move regulated dollar stablecoins away from DeFi and leave room for offshore alternatives.<\/p>\n<p>As crypto.news previously reported, Treasury\u2019s proposed stablecoin AML rules would require bank-style controls across primary and secondary markets. The draft remains under review and may change after public comments.<\/p>\n<h2 class=\"wp-block-heading\"><strong>CLARITY Act debate adds pressure to rulemaking<\/strong><\/h2>\n<p>The dispute comes as lawmakers continue work on the CLARITY Act. The Senate proposal includes protections for open-source developers and service providers that do not control customer funds.<\/p>\n<p>As previously reported, Solana Institute CEO Kristin Smith urged senators to preserve those developer protections. More than 200 crypto companies and organizations have backed efforts to advance the bill.<\/p>\n<p>The Senate Banking Committee advanced the CLARITY Act in May, but a full Senate vote has not occurred. Lawmakers continue to debate stablecoin rewards, anti-money laundering safeguards and protections for decentralized software.<\/p>\n<p>The GENIUS Act became law in July 2025 and created a federal framework for payment stablecoins. Its operating rules will shape how regulated issuers manage transactions across controlled platforms and permissionless blockchain networks.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Hyperliquid Policy Center and Paradigm have asked the U.S. Treasury to narrow parts of its proposed anti-money laundering rules for stablecoin issuers.\u00a0 Summary Hyperliquid and Paradigm want secondary-market duties&hellip;<\/p>\n","protected":false},"author":1,"featured_media":29136,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-31365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/31365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=31365"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/31365\/revisions"}],"predecessor-version":[{"id":31366,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/31365\/revisions\/31366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/29136"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=31365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=31365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=31365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}