Paradigm and Hyperliquid Policy Center Push Back on GENIUS Act AML Rule

Paradigm and the Hyperliquid Policy Center have pushed back on a stablecoin anti-money laundering provision linked to the GENIUS Act, arguing that the rule needs clearer boundaries for the crypto market. According to the groups, issuers, DeFi applications, and validators should not be left with unclear responsibility once stablecoins change hands.

The dispute matters because stablecoins are widely used across crypto trading, payments, and decentralized finance. If compliance obligations are not clearly defined, companies and infrastructure providers could face uncertainty over when their responsibility begins and ends.

The groups’ concern centers on how responsibility is assigned after a stablecoin leaves the issuer’s direct control. Their position suggests that regulators should distinguish between entities that issue tokens, applications that users interact with, and validators that help process blockchain activity.

That distinction is especially important for DeFi systems, where transactions can move through open protocols rather than a single centralized intermediary. Without clearer limits, the rule could raise compliance questions for participants that do not directly control user funds or token transfers.

The pushback adds to the broader debate over how stablecoin rules should apply across crypto’s different layers. For now, Paradigm and the Hyperliquid Policy Center are calling for a more precise framework that defines who is responsible once stablecoins circulate beyond the point of issuance.