Hyperliquid and Paradigm Urge U.S. Treasury to Revise GENIUS Act Anti-Money Laundering Rules for Stablecoin Issuers

The GENIUS Act, enacted on July 18, 2025, created the first comprehensive U.S. federal framework for payment stablecoins. It generally limits issuance in the United States to federally or state-qualified entities and extends obligations to exchanges, custodians and other digital asset service providers. The framework matters because it will determine how dollar-linked tokens, including those issued offshore, can be created, marketed and sold to U.S. customers.

The Treasury Department published a proposed rule on Aug. 18, 2026, defining terms including “issue,” “offer or sell” and “located in the United States,” with extraterritorial reach when transactions involve people in the country. Foreign issuers could qualify if their home regime is deemed comparable and they register with the Office of the Comptroller of the Currency. Comments are due Oct. 19; knowing participation in unlawful issuance can carry fines of up to $1 million per violation and as much as five years in prison.

Stablecoins typically maintain their value through assets denominated in U.S. dollars and have become an important dollar channel for crypto trading and cross-border payments. The United States signed the GENIUS Act into law on July 18, 2025, establishing a federal issuance framework for the first time. It requires every $1 token to be backed by at least $1 in eligible reserve assets. Stablecoins, however, are not bank deposits and are not covered by FDIC deposit insurance.

The FDIC board approved a proposed rule on April 7, 2026, and published it in the Federal Register on April 10. The proposal would require issuers under its supervision to meet standards covering reserve assets, redemption within two business days, capital, risk management and custody. The OCC issued its own proposal on February 25, followed by customer identification rules proposed by five federal agencies on June 18. Final rules had yet to be issued by the July 18 statutory deadline.

U.S. President Donald Trump signed the GENIUS Act into law on July 18, 2025, creating the first federal framework for payment stablecoins, with requirements covering reserves, redemptions and anti-money-laundering controls. The law also preserves a state regulatory pathway. Issuers with aggregate circulation of no more than $10 billion may opt for state oversight if the state regime is substantially similar to the federal framework and receives approval from the Stablecoin Certification Review Committee.

The U.S. Treasury Department proposed its first implementing rules on April 1, 2026, setting out principles for assessing whether state regimes are substantially similar to the federal framework. The proposal was published in the Federal Register on April 3, opening a 60-day comment period that ran through June 2. On June 16, a bipartisan group of senators including Cynthia Lummis again urged the Treasury to specify the process and timeline for states to seek certification on an ongoing basis, preventing state oversight from being rendered ineffective.

The United States signed the GENIUS Act into law on July 18, 2025, requiring payment stablecoins to be fully backed by highly liquid assets such as cash and short-term U.S. Treasuries. The law has created a new reserve-management market for traditional asset managers, while directly affecting stablecoin redemption capacity and regulatory compliance.

State Street Investment Management launched the Stablecoin Reserves Money Market Fund (SSCXX) on June 16, 2026. Registered under Rule 2a-7, the fund invests primarily in U.S. government securities and repurchase agreements. It had about $121 million in initial assets and a 3.51% yield, with State Street Bank and Trust Company and Anchorage Digital serving as seed investors.

US President Donald Trump signed the GENIUS Act on July 18, 2025, establishing the first federal regulatory framework for payment stablecoins. The Treasury Department’s FinCEN and OFAC are required to bring qualified issuers under Bank Secrecy Act and sanctions rules, affecting the issuance, monitoring and global circulation of US dollar stablecoins.

On June 10, 2026, federally chartered crypto bank Anchorage Digital publicly released a comment letter supporting rules proposed by FinCEN and OFAC on April 8. It also asked the agencies to clarify whether issuers would face strict liability for sanctioned secondary-market addresses they cannot identify and to allow companies to share a single AML/CFT program. The matter did not involve any transaction amount.

US President Donald Trump signed the GENIUS Act on July 18, 2025, establishing the first federal regulatory framework for payment stablecoins. The law covers issuer eligibility, reserve assets and redemption mechanisms. It takes effect on the earlier of 120 days after final rules are issued or 18 months after enactment. The consistency of rules across agencies will shape competition between banks and crypto companies.

On April 21, 2026, groups including the American Bankers Association and the Bank Policy Institute wrote to the Treasury Department, the Federal Deposit Insurance Corporation, FinCEN and OFAC. They asked the agencies to wait until the Office of the Comptroller of the Currency completes its issuer rules and then allow a comment period of at least 60 days. The banking groups said the three rules are interdependent and warned that finalizing them simultaneously could create inconsistent standards and enforcement conflicts.