Treasury Stablecoin Proposal Draws Major Warning From Hyperliquid Policy Center–Here’s Why
Paradigm and the Hyperliquid Policy Center asked Treasury to narrow parts of the proposed GENIUS Act stablecoin compliance rule. They support AML and sanctions controls for permitted payment stablecoin issuers, but argue the rule should be clearer about where obligations stop. Their main point is that issuers should conduct due diligence on direct customers, not be forced to police secondary-market transfers where no direct relationship exists. They say KYC should mainly apply at regulated on-ramps and off-ramps, and broader monitoring would generate excessive low-value SARs with little benefit. They also want the final rule to clarify “lawful order” requirements so they do not extend to protocol developers, self-custody interfaces, or other excluded technologies. Without that fix, they warn the rule could effectively burden validators and blockbuilders across major networks, pushing activity offshore and undermining US onshoring goals.
