Hyperliquid Policy Center and Paradigm Urge U.S. to Revise Proposed AML Rules

ChainCatcher report, according to The Block, Hyperliquid Policy Center (HPC) and venture capital firm Paradigm jointly sent a letter to the U.S. Department of the Treasury requesting revisions to a proposed anti-money laundering rule. The rule, jointly proposed in April by FinCEN and OFAC under the Treasury Department, aims to classify stablecoin issuers as financial institutions and hold them strictly liable for transactions they cannot effectively monitor. In their letter, HPC and Paradigm expressed support for FinCEN’s focus on primary market compliance obligations—specifically, issuer know-your-customer (KYC) procedures—but argued that in secondary markets, where issuers only see wallet addresses and transaction amounts, a more flexible approach should be adopted. They warned that extending issuer liability to secondary market activities conducted via smart contracts would incentivize issuers to deploy stablecoins only in permissioned environments, driving regulated stablecoins out of DeFi and leaving the market to unregulated offshore non-U.S. dollar alternatives. HPC and Paradigm recommended narrowing the definition of “activities related to payment stablecoins” and reconsidering OFAC’s treatment of smart contract interactions.