Paradigm, Hyperliquid Policy Center Push Back on GENIUS Act Stablecoin AML Rule

Paradigm and the Hyperliquid Policy Center submitted a joint comment on the proposed GENIUS Act on May 15, 2024, arguing that the bill's anti-money laundering (AML) requirements for stablecoins are unclear. The organizations stated that the bill needs to define more precisely who is responsible for AML compliance when stablecoins are transferred between parties, particularly in decentralized finance (DeFi) ecosystems. They highlighted that the current language could impose undue burdens on issuers, DeFi application developers, and network validators. The groups specifically requested clearer boundaries regarding the "obligated parties" and the "covered transactions" to avoid ambiguity and potential overreach. They suggested that the bill should provide specific thresholds or conditions under which different entities would be held accountable for AML checks. This clarification, they argue, is essential for fostering innovation in the stablecoin market while still addressing legitimate regulatory concerns. The comment period for the GENIUS Act closed on May 17, 2024, with numerous industry stakeholders expected to provide feedback on its potential impact.