The Hyperliquid Policy Center and Paradigm submitted a joint comment on the proposed FinCEN and OFAC rule implementing the GENIUS Act requirements for payment stablecoin issuers.
The authors of the letter generally supported the idea of concentrating the main responsibilities of issuers in the primary market, where there are direct relationships with clients. At the same time, they requested a narrowing and clarification of several requirements for the secondary market to "avoid creating unnecessary burdens" for public blockchains and DeFi.
The companies proposed to maintain the approach where issuers are not required to file Suspicious Activity Reports (SARs) for secondary transactions. The Travel Rule should also apply to pseudonymous transfers between wallets when operators do not have direct relationships with transaction participants.
Additionally, the organizations suggested expanding the "safe harbor" for voluntary data sharing with regulators to include protocol developers, self-custodial storage interfaces, and other infrastructure services.
Separately, the letter proposed recognizing compliance measures at the smart contract level as sufficient, including transfer limits and address blacklists. The authors requested clarification that the provisions regarding money laundering do not apply to developers, protocol participants, and other levels of on-chain infrastructure.
The proposed FinCEN and OFAC rule was published on April 8. The document implements the GENIUS Act requirements for AML/CFT and sanctions compliance for payment stablecoin issuers.
The provisions require issuers to file SARs, have the technical capability to block, freeze, and reject prohibited transactions, comply with lawful orders from authorities, and maintain an effective sanctions compliance program.
Recall that in June, the Blockchain Association sent an open letter to US Senate leaders John Thune and Chuck Schumer urging them to expedite the passage of the CLARITY Act.