In a significant move for the cryptocurrency sector, the Hyperliquid Policy Center and venture capital firm Paradigm have jointly addressed the US Treasury regarding proposed compliance rules for stablecoins. Their comments focus on the implications of the GENIUS Act and the need for clearer guidelines to avoid unnecessary burdens on market participants, as emphasized in the official statement.
Refinement of Compliance Obligations
The firms have called for a refinement of compliance obligations, particularly in the context of the secondary market. They highlighted that permitted payment stablecoin issuers (PPSIs) typically do not maintain direct relationships with counterparties, suggesting that the current interpretation of the law may impose undue diligence requirements on these entities.
Concerns Over Stringent Reporting Requirements
Furthermore, Hyperliquid and Paradigm cautioned that an overly stringent approach could lead to excessive reporting requirements, which may not yield any tangible public benefits. They emphasized that the intent of Congress was not for PPSIs to conduct additional due diligence for secondary market transactions.
Broad Definition of Lawful Orders
Another point of concern raised by the firms was the broad definition of lawful orders in the proposed rule. They warned that this could unintentionally burden developers of decentralized technologies with compliance obligations. To mitigate these risks, they recommended clarifications to ensure that certain entities are exempt from these requirements, cautioning that failure to do so could push US validator operations overseas, ultimately undermining the goals of the GENIUS Act.
The House of Lords Financial Services Regulation Committee has raised important concerns about the UK's stablecoin regulations, calling for a reassessment to maintain competitiveness. This contrasts with the recent comments from the Hyperliquid Policy Center and Paradigm regarding compliance rules. For more details, see further information.
