In brief – Paradigm and the Hyperliquid Policy Center challenged proposed AML and sanctions rules for stablecoin issuers. – The groups warned that treating secondary market activity like issuer activity could push regulated stablecoins away from DeFi. – Broad rules could create…
nfusion for issuers and infrastructure providers, industry observers told Decrypt. Crypto investment firm Paradigm and the Hyperliquid Policy Center warned U.S. regulators that proposed stablecoin anti-money laundering rules could push regulated dollar tokens away from permissionless DeFi if issuers are made responsible for secondary market activity
In a letter sent Tuesday to FinCEN and OFAC, the two industry groups challenged a proposed rule implementing the GENIUS Act’s anti-money laundering and sanctions requirements for permitted payment stablecoin issuers. Today we filed a comment with @paradigm on @USTreasury’s proposed rule for stablecoin issuers. U.S.-regulated stablecoins power billions of dollars in daily trading, lending, and settlement.
Our comment offers recommendations to preserve their critical role in onchain markets. https:// — Hyperliquid Policy Center (@HyperliquidPC) June 9, 2026 Such an approach could create a “chilling effect” that discourages issuers from deploying to permissionless blockchains, the groups wrote, warning it could end up “pulling U.S.-regulated stablecoins out of DeFi.” The two argue that regulators should separate primary issuance, where issuers have direct customer relationships, from secondary market activity, where stablecoins move through wallets, decentralized finance apps, and validators outside an issuer’s direct control. A wallet address “that simply holds or transfers” a stablecoin should not be treated as an issuer customer, the groups argued. Developers, protocol operators, and validators should also be protected from issuer-style obligations when they have “no direct relationship with the issuer,” they added.