Hyperliquid and Paradigm Push Treasury to Soften Stablecoin AML Rules

Hyperliquid and Paradigm have formally asked the US Treasury to revise its proposed Anti-Money Laundering (AML) rule for stablecoin issuers. The two organizations submitted a joint comment letter on June 9, responding to a draft rule the Treasury proposed in April.

The current draft would require stablecoin issuers to block, freeze, or reject transactions that violate US law or sanctions. Hyperliquid and Paradigm said they support placing AML compliance obligations on primary market participants but argued that issuers cannot meaningfully police activity in the secondary market.

They also pointed out that the Financial Crimes Enforcement Network (FinCEN) has already outlined a limited approach to secondary market compliance, which is the correct standard. The two organizations warned of a structural risk if the rule takes effect as written, saying it would incentivize issuers to deploy only into permissioned environments.

An issuer facing those obligations would be removed from decentralized finance (DeFi) entirely. Hyperliquid and Paradigm argued that the resulting gap would be filled by unregulated, offshore, non-dollar alternatives.