{"id":606846,"date":"2026-06-10T06:00:49","date_gmt":"2026-06-10T10:00:49","guid":{"rendered":"https:\/\/ambcrypto.com\/?p=606846"},"modified":"2026-06-10T05:14:16","modified_gmt":"2026-06-10T09:14:16","slug":"market-integrity-or-defi-risk-paradigm-hpc-question-stablecoin-rule-scope","status":"publish","type":"post","link":"https:\/\/ambcrypto.com\/market-integrity-or-defi-risk-paradigm-hpc-question-stablecoin-rule-scope\/","title":{"rendered":"\u2018Market integrity\u2019 or DeFi risk? Paradigm, HPC question stablecoin rule scope"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">On the 9th of June, the Hyperliquid Policy Center (HPC) and the venture capital firm Paradigm jointly sent a comment letter to the US Treasury. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the letter, they asked the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) to improve certain aspects of their proposed stablecoin compliance rule linked to the GENIUS Act.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They said,<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">We broadly support the proposed rule, and in particular FinCEN\u2019s decision to tailor most issuer obligations to the primary market, but write to recommend that certain secondary market obligations be clarified or narrowed to avoid unintended consequences for permissionless blockchain infrastructure and the DeFi ecosystem.<\/span><\/p><\/blockquote>\n<h2><span style=\"font-weight: 400;\">Key six pointers listed by Paradigm and the HPC<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Having said that, Paradigm and the HPC <a href=\"https:\/\/hyperliquidpolicy.org\/hpcparadigmclone\/20260609hyperliquidpolicycenterandparadigmrin1506ab73.pdf\" target=\"_blank\" rel=\"noopener\">listed<\/a> six crucial areas in which they think regulators ought to improve the proposed <a href=\"https:\/\/ambcrypto.com\/category\/stablecoins\/\" target=\"_blank\" rel=\"noopener\">stablecoin<\/a> regulations. They demanded more precise rules about the obligations of stablecoin developers and issuers regarding secondary-market trading. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The group further urged for clarification on when issuers must block, freeze, or reject transactions. They also proposed enhancements to safe harbor protections for Suspicious Activity Report (SAR) filings. Additionally, the groups urged regulators to clarify the extent of adherence to legitimate government directives.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"> They also called for the improvement of Customer Due Diligence (CDD) regulations. Moreover, they are eyeing further clarification on secondary market obligations pertaining to sanctions, including the definition of an effective sanctions compliance program. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Simply put, the goal of the recommendations is to guarantee that the requirements for compliance are realistic, well-defined, and compatible with the way decentralized blockchain networks function.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Community reaction and more <\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Although the GENIUS Act specifically forbids stablecoin issuers from paying out yields to holders, third-party cryptocurrency companies are exempt from this rule. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">To solve this problem, the CLARITY Act will maintain activity-based stablecoin rewards. The passage of the latter will allow exchanges and other third-party businesses to allocate yield according to this standard.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This move was also praised by the crypto community, as noted by Jacob Robinson, host of Law of Code, who said,\u00a0<\/span><\/p>\n<figure id=\"attachment_606864\" aria-describedby=\"caption-attachment-606864\" style=\"width: 946px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Jacob-Robinson.png\"><img decoding=\"async\" class=\"wp-image-606864 size-full\" src=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Jacob-Robinson.png\" alt=\"Jacob Robinson\" width=\"946\" height=\"500\" srcset=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Jacob-Robinson.png 946w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Jacob-Robinson-300x159.png 300w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Jacob-Robinson-768x406.png 768w\" sizes=\"(max-width: 946px) 100vw, 946px\" \/><\/a><figcaption id=\"caption-attachment-606864\" class=\"wp-caption-text\">Source: Jacob Robinson\/X<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Echoing similar sentiments, Brad Bourque, Policy Counsel at HPC, added,\u00a0<\/span><\/p>\n<figure id=\"attachment_606865\" aria-describedby=\"caption-attachment-606865\" style=\"width: 938px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Brad-Bourque.png\"><img decoding=\"async\" class=\"wp-image-606865 size-full\" src=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Brad-Bourque.png\" alt=\"Brad Bourque\" width=\"938\" height=\"236\" srcset=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Brad-Bourque.png 938w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Brad-Bourque-300x75.png 300w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2026\/06\/Brad-Bourque-768x193.png 768w\" sizes=\"(max-width: 938px) 100vw, 938px\" \/><\/a><figcaption id=\"caption-attachment-606865\" class=\"wp-caption-text\">Source: Brad Bourque\/X<\/figcaption><\/figure>\n<h2><span style=\"font-weight: 400;\">Main concerns\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here, the primary worry expressed is that the proposed rules of the GENIUS Act may inadvertently extend them to decentralized blockchain infrastructure and secondary-market activity. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">They contend that excessively stringent KYC, sanctions, and monitoring regulations may deter issuers from using permissionless blockchains, impede DeFi innovation, and drive operations offshore. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This comes as a comprehensive new stablecoin regulation framework has been <a href=\"https:\/\/ambcrypto.com\/new-york-positions-itself-as-the-blueprint-regulator-for-genius-era-stablecoins\/\" target=\"_blank\" rel=\"noopener\">proposed<\/a> by the New York State Department of Financial Services [NYDFS]. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its purpose is to bring the state&#8217;s oversight system into compliance with federal requirements under the GENIUS Act.\u00a0<\/span><\/p>\n<hr \/>\n<h2><span style=\"font-weight: 400;\">Final Summary <\/span><\/h2>\n<ul>\n<li><em>Their primary concern is that broad compliance regulations may impose regulatory duties on DeFi infrastructure and secondary market participants in addition to stablecoin issuers.<\/em><\/li>\n<li><span style=\"font-weight: 400;\"><em>They urged regulators to keep a clear separation between secondary-market transactions and primary-market activities.<\/em><br \/>\n<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Why are experts in crypto policy advising US regulators to reconsider certain provisions of the GENIUS Act before it is signed into law?<\/p>\n","protected":false},"author":66,"featured_media":606881,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[66,4,5825,20],"tags":[6427],"class_list":["post-606846","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-news","category-social","category-stablecoins","category-trading-view","tag-ambcrypto"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.5 (Yoast SEO v28.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>\u2018Market integrity\u2019 or DeFi risk? 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