Paradigm and HPC Call for Refinements in Stablecoin Compliance Rule
- The Hyperliquid Policy Center (HPC) and venture capital firm Paradigm submitted comments to the US Treasury regarding a proposed stablecoin compliance rule.
- They urged the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) to refine parts of the rule tied to the GENIUS Act.
- The firms argued that compliance obligations should not extend beyond what Congress intended, particularly in secondary markets where permitted payment stablecoin issuers lack direct relationships with counterparties.
- They warned against broad interpretations that could impose undue burdens on developers of distributed ledger protocols and other technologies excluded from the GENIUS Act’s definition of a “digital asset service provider.”
- Concerns were raised about potential offshore movement of US validator stakes and blockbuilding operations if lawful order obligations are misapplied.
Paradigm and HPC emphasized that compliance costs should focus on regulated on-ramps and off-ramps, akin to traditional banking practices where KYC is conducted at entry points rather than monitoring every transaction post-withdrawal.
Their comments highlight concerns over unnecessary regulatory burdens potentially leading to increased costs without clear public benefit, urging clarification in defining lawful orders to prevent unintended consequences for US-based validators. (Source)
