Two crypto policy groups are pushing back on a proposed stablecoin AML rule tied to the GENIUS Act, arguing that the bill does not spell out clear responsibility when stablecoins change hands.
In a statement summarized by Decrypt, Paradigm and the Hyperliquid Policy Center said issuers, DeFi applications, and validators need clearer limits on who is responsible once stablecoins are transferred. Their core complaint is narrow but consequential. The rule’s compliance burden, and the risk of enforcement, depend on who the law treats as accountable at each step of the stablecoin lifecycle.
Why the GENIUS Act stablecoin AML rule is getting resistance
Stablecoins sit at the center of a lot of on-chain flows. That means “who touched it” can vary. Issuers control minting and redemption. DeFi apps orchestrate trades, lending, and collateral swaps. Validators and other network participants keep transactions running.
Decrypt’s reporting highlights the groups’ position that GENIUS needs clearer boundaries so these roles do not collapse into a single, undefined responsibility bucket.
The liability question the groups want answered
According to Decrypt, the groups say issuers, DeFi apps, and validators need clearer limits on who is responsible once stablecoins change hands. That phrasing matters because it frames liability as a transfer-time problem, not just an issuer-time problem.
In practical terms, the desk’s concern is simple. If the bill does not distinguish between participants who facilitate payments and those who structure issuance, then compliance expectations can become vague. Vague rules tend to push risk outward, either through conservative integrations or through uneven enforcement.
What this could mean for DeFi integrations
If regulators treat DeFi apps and validators as part of the AML compliance chain without defining their specific obligations, developers face a translation problem. They cannot build compliance into smart contracts if the law never says what “compliance” means for those contracts.
Decrypt’s summary does not include more granular details like the exact language at issue or specific compliance mechanisms. But the pushback itself signals that the debate is not just about AML in the abstract. It is about allocation of duty across a fragmented system.
The deadline that matters
Decrypt’s provided text does not include timing for the GENIUS Act process. So readers should watch for the next legislative or regulatory milestone where stakeholders file comments or where the bill’s text is refined.
For now, the message from Paradigm and the Hyperliquid Policy Center is clear. Stablecoin rules need more than intent. They need defined responsibility across issuance, DeFi usage, and validation so market participants can assess asset risk and compliance exposure in a way that matches how stablecoins actually move.