Anchorage Backs Treasury’s GENIUS AML Rules, Seeks Secondary Market Clarity
Anchorage Digital supports U.S. Treasury’s proposed AML framework for stablecoins under the GENIUS Act, urging clarity on secondary-market sanctions. Hyperliquid and Paradigm also call for broader exemptions, highlighting industry concerns over compliance burdens and potential issuer liability for unauthorized smart contract transactions.
Quick Take
Anchorage Digital supports GENIUS AML rules, asking for secondary-market sanctions clarity.
Hyperliquid and Paradigm seek broader carveouts for secondary-market transactions.
Proposed rules classify stablecoin issuers as financial institutions with AML obligations.
Anchorage warns against strict liability for issuers in secondary smart contract use.
Market Impact Analysis
NeutralRegulatory clarity sought by Anchorage could eventually foster stablecoin adoption, but immediate price impact is negligible as the article reflects comment letters, not final rules.
Speculation Analysis
Key Takeaways
- Anchorage Digital backs Treasury’s GENIUS AML framework but pushes for explicit secondary-market sanctions boundaries.
- Trading firms Hyperliquid and Paradigm warn that proposed rules could impose impossible compliance demands on issuers for smart contract activity.
- The April 2026 proposal would reclassify stablecoin issuers as financial institutions, triggering AML and sanctions obligations.
- Industry comments focus on protecting issuers from strict liability when users transact through secondary smart contracts.
What Happened
Anchorage Digital, the federally chartered crypto bank, threw its weight behind Treasury’s proposed AML regime for stablecoins while drawing a red line on secondary-market liability. In a comment letter published this week, the firm told FinCEN and OFAC that the GENIUS Act rules get the compliance innovation balance right—but they must clarify that issuers aren’t on the hook for sanction violations when unknown parties interact with smart contracts on decentralized exchanges or peer-to-peer transfers.
Two other heavyweights—Hyperliquid and Paradigm—filed their own letter, sounding a louder alarm. Their submission argues the framework “treats smart contract interactions as an ongoing provision of services,” pulling secondary transactions into the issuer’s compliance perimeter regardless of whether the issuer has any visibility into those transacting. Together, the letters signal a united industry push to carve out unintended liability before the rules become final.
The Numbers
The April 2026 proposal jointly issued by FinCEN and OFAC would designate payment stablecoin issuers as financial institutions under the Bank Secrecy Act. That triggers AML program requirements, customer due diligence, and suspicious activity reporting. At least three major industry players submitted detailed comments. Anchorage’s letter runs several pages, underscoring that “a clear and workable final rule gives regulated institutions the certainty they need.” Hyperliquid and Paradigm argued the framework could expose issuers to sanctions liability for trillions in secondary-market volume over which they exercise no control. While no direct market data moved, the regulatory path could affect stablecoin growth projections from $200 billion to over $2 trillion by 2030.
Why It Happened
The GENIUS Act aims to bring stablecoins under the anti-money-laundering umbrella—a priority for lawmakers worried about their growing role in payments. Treasury’s move to classify issuers as financial institutions follows a broader push to treat crypto actors like traditional banks. Industry pushback zeroes in on secondary markets because stablecoin protocols often rely on open smart contracts where the issuer cannot gatekeep or monitor every transaction. Holding issuers strictly liable for what happens in those permissionless environments would force impossible compliance burdens, potentially driving innovation offshore. The comments target the specific OFAC provision extending “services” to secondary interactions, which the industry says conflates the role of a tool provider with that of a financial intermediary.
Anchorage’s more measured support distinguishes it from Hyperliquid and Paradigm’s sharper critique, but all three voices converge on the need to align regulatory obligations with actual control.
Broader Impact
The outcome of these comments could set a precedent for how global regulators treat decentralized protocols. If Treasury accepts the industry’s logic, it would signal that the U.S. intends to regulate stablecoins without crushing the smart contract innovation that underpins them. A rigid rejection, however, could spur a migration of stablecoin issuance to friendlier jurisdictions, undermining American competitiveness in a market projected to anchor the future of dollar-denominated payments. The letters also echo parallel debates in the SEC over whether code publication is protected speech, suggesting that cross-agency consistency may be the next battleground.
What to Watch Next
- Final rule language on secondary markets: The phrase “provision of services” will be the fulcrum. Any narrowing could ease industry fears.
- Other crypto firms’ responses: Circle, Tether, and issuer consortia have yet to weigh in publicly—their silence may break as the comment period extends.
- Legislative pushback: If Treasury overreaches, expect Congressional allies to frame it as a threat to innovation, escalating the fight.
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