Crypto venture firm Paradigm and the Hyperliquid Policy Center have come out against the stablecoin anti-money laundering provision in the proposed GENIUS Act. They argue the current language leaves too much ambiguity about who's responsible when a stablecoin moves through the financial system.
What the bill requires
The GENIUS Act would impose AML obligations on stablecoin issuers. But Paradigm and the Hyperliquid Policy Center say the rule doesn't clearly define where those duties stop after a token changes hands. Once a stablecoin has been transferred to a DeFi application or a validator, the question of liability gets murky.
Both groups want lawmakers to set firmer boundaries. An issuer, they argue, shouldn't bear ongoing AML risk for every subsequent transaction involving its token — especially when it no longer controls the asset. Similarly, validators who process transactions should have a clear line between their role and the originator's.
Why responsibility matters in DeFi
DeFi applications and validators operate differently than banks. They don't hold custody of user funds in the traditional sense, and they often can't freeze or reverse transactions. Pushing full AML liability onto them could make it impossible to run compliant software in the U.S., the critics say.
Paradigm and the Hyperliquid Policy Center didn't reject the idea of stablecoin oversight. They just want the law to match how the technology actually works. Without clearer guardrails, they argue, even well-intentioned rules could push development offshore.
The timing of the pushback
The GENIUS Act has been moving through Congress with bipartisan support, but this opposition from two influential crypto policy players could slow things down. Neither group offered a full rewrite of the AML section. Instead they focused on the gaps: what happens after a transfer, who polices the next leg of the journey, and where liability ends.
The bill's sponsors have said they want to hear from industry. Paradigm and the Hyperliquid Policy Center just gave them something to listen to.
