Paradigm, HPC Urge US Treasury to Loosen Stablecoin AML Rules

Crypto venture capital firm Paradigm and DeFi policy group Hyperliquid Policy Center urged the US Treasury Department to ease anti-money laundering rules tied to stablecoins. The scope of those rules for the decentralized finance ecosystem is emerging as a key issue for the market.

The Block reported on June 9 that Paradigm and HPC, in a joint letter, asked the Treasury Department's Financial Crimes Enforcement Network and Office of Foreign Assets Control to revise stablecoin rules.

They argued that the proposed rules could impose excessive liability on stablecoin issuers for transactions they cannot practically control.

US financial authorities in April proposed detailed rules to implement the stablecoin bill known as the GENIUS Act.

The proposal would treat stablecoin issuers similarly to financial institutions for purposes of the Bank Secrecy Act.

Paradigm and HPC said issuers should bear AML obligations for primary-market activity such as issuance and redemption, where know-your-customer checks are possible.

But they warned that extending issuer liability to secondary-market transactions conducted through smart contracts could sharply curb DeFi use and innovation.

As Congress debates the CLARITY Act and a stablecoin regulatory framework, the market is focused on how far AML rules will extend. That scope could become an important variable in the digital-asset industry's growth.