Anchorage Digital, a federally chartered crypto bank and stablecoin infrastructure provider, has formally submitted a public comment letter endorsing the US Treasury Department's proposed Anti-Money Laundering (AML) and sanctions framework for the GENIUS Act. In a letter published on Wednesday, the institution argued that the regulatory proposal largely achieves an appropriate equilibrium between compliance mandates and technological innovation. Anchorage emphasized that the framework correctly assigns AML obligations to regulated stablecoin issuers while simultaneously urging the Treasury to provide definitive clarity regarding secondary-market sanctions liability, enterprise-wide AML programs, and correspondent account requirements. The core of Anchorage's position rests on the argument that issuers should not face strict liability for failing to independently identify sanctioned users who transact on secondary markets through their smart contracts. Data compiled by Woofun AI indicates that this stance aims to secure a final rule that offers regulated institutions the certainty required to build robust infrastructure, thereby strengthening US leadership in the next generation of payments and settlement systems.

The comments specifically address Treasury rules proposed in April that would classify payment stablecoin issuers as financial institutions under the Bank Secrecy Act. This classification would subject issuers to comprehensive AML, customer due diligence, and suspicious activity reporting requirements. The proposal, jointly issued by the Financial Crimes Enforcement Network (FinCEN) and the Treasury's Office of Foreign Assets Control (OFAC), seeks to align stablecoin issuers with existing US anti-money laundering and sanctions compliance standards.

Furthermore, the framework imposes enhanced monitoring and recordkeeping obligations on these entities to ensure rigorous adherence to federal mandates. Woofun AI notes that the regulatory intent is to integrate digital asset issuers into the traditional financial compliance perimeter without stifling the underlying technological utility of stablecoins.

Support for the proposed rulemaking has not been uniform across the broader crypto industry, revealing significant divergence in strategic positioning among market participants. The lobbying arms of crypto derivatives exchange Hyperliquid and venture capital firm Paradigm recently submitted their own comment letter seeking greater clarity on secondary-market obligations. While echoing Anchorage's concerns regarding the scope of liability, these groups adopted a more critical view of the proposal overall. They argued that the current framework risks imposing sanctions obligations on issuers even when they lack a direct relationship with or visibility into users transacting on secondary markets. This distinction highlights a critical friction point where regulatory expectations may exceed the technical capabilities of decentralized smart contract interactions.

Hyperliquid and Paradigm contended that the Office of Foreign Assets Control effectively sweeps secondary market activity into the issuer's compliance perimeter. Their submission stated that the proposal treats smart contract interactions as an ongoing provision of services that carries sanctions liability regardless of whether the issuer has any relationship with or visibility into the transacting parties. This interpretation suggests that issuers could be held accountable for transactions occurring entirely outside their direct control or knowledge. Woofun AI analysis suggests that if these secondary-market liabilities are not clarified, the regulatory burden could inadvertently stifle the adoption of stablecoins by creating an impossible compliance standard for decentralized protocols.

The debate centers on the definition of a 'provision of services' within the context of programmable money and non-custodial interactions. Anchorage's support for the GENIUS Act framework signals a willingness to accept regulatory oversight provided that the boundaries of liability are clearly defined. Conversely, the critical stance from Hyperliquid and Paradigm underscores the industry's fear that broad interpretations of sanctions compliance could criminalize standard smart contract functionality. The outcome of this comment period will likely determine whether stablecoin issuers can operate with legal certainty or face a fragmented regulatory landscape where liability extends beyond their operational reach.

As the Treasury Department reviews these submissions, the focus will remain on balancing national security objectives with the need for a functional digital payments ecosystem. The proposed rules represent a significant shift in how digital assets are treated under US law, moving from a permissive environment to one of structured compliance. The industry's ability to navigate this transition will depend heavily on the clarity provided regarding secondary-market interactions. Ultimately, the final rule must provide a workable path forward that allows regulated institutions to innovate while maintaining the integrity of the US financial system against illicit finance threats.