Paradigm, Hyperliquid warn GENIUS Act could push stablecoins out of DeFi

Crypto investment firm Paradigm and the Hyperliquid Policy Center have voiced concerns over the anti-money laundering (AML) provisions for stablecoins in the proposed GENIUS Act. In a letter to the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), the two organizations argued that holding issuers responsible for secondary market transactions beyond their control could lead U.S.-regulated stablecoins to abandon the permissionless DeFi ecosystem. They stressed the need to differentiate between the issuance stage and secondary market distribution through wallets, DeFi protocols, and validators. The letter added that issuer-level regulatory obligations should not be imposed on simple holding and transfer addresses, developers, protocol operators, or validators.