Why the Treasury’s New AML Rule May Stall the Next Wave of Stablecoin Innovation
A coalition led by Hyperliquid, together with venture capital firm Paradigm, has lodged a joint brief with the U.S. Treasury, urging a rethink of the administration’s proposed anti‑money‑laundering (AML) regulation. The brief warns that the rule—intended to tighten oversight of decentralized stablecoin activity—could sharply reduce transaction flow on public blockchains just as cross‑chain stablecoin volumes have risen 12% in the last quarter.
Key Takeaways
- Stakeholder pushback: Hyperliquid‑backed coalition and Paradigm filed a coordinated brief, signaling organized industry resistance to the Treasury’s draft rule.
- Regulatory focus: The proposed AML framework would extend traditional reporting obligations to decentralized stablecoin transfers, a move that industry groups say is premature.
- Market momentum: Data cited by the coalition shows a 12% quarter‑over‑quarter increase in cross‑chain stablecoin volume, indicating growing user demand for interoperable, on‑chain assets.
- Potential impact: Critics argue the rule could curtail liquidity, impede DeFi development, and push activity to less regulated jurisdictions.
- Policy dilemma: The Treasury must balance legitimate AML objectives with preserving the competitive edge of U.S. crypto innovation.
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