U.S. · U.S. Treasury · The Block
Hyperliquid advocate and Paradigm urge US to revise proposed anti-money laundering rule
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Prolific crypto venture capital firm Paradigm and Hyperliquid Policy Center, a DeFi advocacy group, jointly issued a letter Tuesday urging the U.S. Treasury to alter a proposed anti-money laundering rule that they say would subject stablecoin issuers "to strict liability for transactions they cannot meaningfully police.
Key facts
- Hyperliquid Foundation helped create HPC in February with a donation of roughly $29 million worth of HYPE tokens
- Congress passed the GENIUS Act last year in part due to President Donald Trump's administration supporting the digital assets industry
- The Hyperliquid-backed lobby group and Paradigm, a backer of Hyperliquid, are seeking to prevent rules they say would limit decentralized stablecoin usage on public blockchains
- OFAC’s proposal to extend issuer liability to secondary market activity through smart contracts imposes unnecessarily strict liability for transactions issuers cannot control, HPC and Paradigm argue
Summary
Prolific crypto venture capital firm Paradigm and Hyperliquid Policy Center, a DeFi advocacy group, jointly issued a letter Tuesday urging the U.S. Treasury to alter a proposed anti-money laundering rule that they say would subject stablecoin issuers "to strict liability for transactions they cannot meaningfully police. The Hyperliquid-backed lobby group and Paradigm, a backer of Hyperliquid, are seeking to prevent rules they say would limit decentralized stablecoin usage on public blockchains. Back in April, the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) jointly proposed a rule to implement provisions of the GENIUS Act related to treating stablecoin issuers like financial institutions for purposes of the Bank Secrecy Act.
HPC and Paradigm said they support FinCEN's approach of focusing on compliance obligations on the primary market, where issuers know their customers, and take a lighter approach in the secondary market, where issuers only see wallet addresses and transaction amounts.