Paradigm and the Hyperliquid Policy Center filed a joint comment asking Treasury, FinCEN, and OFAC to narrow the GENIUS Act AML/sanctions rule so secondary-market DeFi activity does not become issuer liability. They support primary-market compliance, but say OFAC’s smart-contract framing could make stablecoin issuers strictly liable for peer-to-peer transfers they cannot see or stop, pushing U.S.-regulated stablecoins into permissioned rails. Their fixes: keep SAR duties to direct issuer customers, add safe harbors for DeFi developers and protocols, recognize programmable controls like blacklists, and narrow “payment stablecoin-related activity.” HPC was launched in February with roughly $29 million in HYPE from the Hyperliquid Foundation, so this is Hyperliquid’s policy arm trying to keep public-chain stablecoin liquidity legally viable.

TLDR by @Benthic

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