Anchorage backs Treasury GENIUS stablecoin AML plan, seeks limits on secondary-market liability
The crypto bank urged FinCEN and OFAC to avoid strict liability for sanctioned-user activity via smart contracts.
Anchorage Digital backed the US Treasury Department’s proposed AML and sanctions framework tied to the GENIUS Act while pressing regulators to draw a bright line on secondary-market sanctions exposure. The firm argued stablecoin issuers should not be held strictly liable for failing to identify sanctioned users transacting through smart contracts after issuance.
Key Takeaways
- Anchorage Digital supported Treasury’s proposed GENIUS Act AML and sanctions framework while requesting clearer boundaries on secondary-market sanctions exposure.
- An April proposal jointly issued by FinCEN and OFAC would treat payment stablecoin issuers as Bank Secrecy Act financial institutions, triggering AML, CDD, SARs, and enhanced monitoring and recordkeeping.
- The comment letter pushed back on a strict-liability standard for sanctioned-user activity that occurs through secondary-market smart contract interactions.
- Hyperliquid and Paradigm’s lobbying arms filed a separate letter that echoed the secondary-market concern but took a more critical stance on the framework overall.
Anchorage Endorses Treasury’s GENIUS Stablecoin AML Plan—With a Secondary-Market Caveat
Anchorage Digital, described as a federally chartered crypto bank and stablecoin infrastructure provider, submitted a public comment letter supporting the US Treasury Department’s proposed AML and sanctions framework tied to the GENIUS Act.
The firm framed the proposal as broadly workable, arguing it “largely strike[s] the right balance between compliance and innovation,” while still asking Treasury to tighten several definitions that would determine how far issuer obligations extend once a stablecoin is in circulation.
Anchorage’s central ask was explicit: issuers “should not face strict liability for failing to independently identify sanctioned users who transact on secondary markets through their smart contracts.” The letter also called for clarity on “enterprise-wide AML programs” and “correspondent account requirements,” signaling that the compliance perimeter is still unsettled in areas that matter for how issuers operationalize controls.
“A final rule that is clear and workable gives regulated institutions the certainty they need to build, and strengthens U.S. leadership in the next generation of payments and settlement infrastructure,” Anchorage said.
How FinCEN/OFAC Would Treat Payment Stablecoin Issuers Under the Bank Secrecy Act
Treasury’s proposal, issued in April jointly by the Financial Crimes Enforcement Network (FinCEN) and Treasury’s Office of Foreign Assets Control (OFAC), would classify payment stablecoin issuers as financial institutions under the Bank Secrecy Act.
That designation is not cosmetic. It pulls issuers into a familiar compliance stack: AML programs, customer due diligence (CDD), suspicious activity reporting (SARs), plus enhanced monitoring and recordkeeping obligations. For traders, the practical implication is that issuer behavior can shift under that burden, especially around issuance and redemption flows where counterparties are identifiable and controls are easiest to enforce.
The second-order effect is design pressure. If issuers are treated like BSA financial institutions, they have incentives to build controls that are legible to examiners, which can influence how they monitor on-chain activity and how aggressively they gate access at the edges of the system.
The Flashpoint: When Smart-Contract Secondary Trading Creates Sanctions Exposure
The tradable uncertainty sits in the gap between what an issuer can control and what a smart contract allows after issuance. Secondary-market activity, by definition, happens between users on exchanges or on-chain rather than directly with the issuer. That is exactly where visibility breaks down.
Anchorage’s request to avoid strict liability is a direct attempt to prevent a regime where an issuer is responsible for sanctioned-user activity it cannot reliably identify in real time, particularly when interactions occur through smart contracts. Hyperliquid and Paradigm’s lobbying arms made the same point more bluntly, warning that the framework could impose sanctions obligations even when issuers lack “a direct relationship with or visibility into” secondary-market users.
“OFAC sweeps secondary market activity into the issuer’s compliance perimeter, treating 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,” they said.
The alignment matters. Different constituencies are converging on the same boundary problem, even while diverging on whether the overall framework is directionally right.
Signals Traders Should Track in the Final Rule: Liability Scope, Monitoring, and Recordkeeping
The first threshold is whether the final FinCEN/OFAC rule explicitly narrows issuer sanctions liability for secondary-market smart contract interactions, including any rejection of a strict-liability standard. That single drafting choice determines whether stablecoin issuers can treat secondary-market sanctions risk as an on-chain monitoring problem or as an existential legal exposure.
Traders should also watch for Treasury clarification on what “enterprise-wide AML program” expectations mean for payment stablecoin issuers, since that language can expand compliance from the issuing entity to broader corporate structures and affiliates.
A third signal is how the final rule frames “correspondent account requirements” for regulated stablecoin issuers and whether it introduces new monitoring or recordkeeping triggers beyond AML, CDD, SARs, and the enhanced obligations already described.
Finally, additional comment letters or public responses from major stablecoin issuers would help price the direction of travel. The current record already shows cross-industry pressure for clearer secondary-market boundaries, which raises the odds that Treasury will have to address the issue directly in the final text.
Why Secondary-Market Liability Language Can Change Stablecoin Market Structure
I don’t think the market is pricing the boring part correctly: the liability standard. The threshold that matters is whether regulators treat secondary-market smart contract interactions as inside the issuer’s sanctions perimeter by default, or whether they draw a line that matches issuer visibility.
If strict liability creeps into the final language, issuers will rationally respond by tightening control points they can actually defend, which usually means harder gating at issuance and redemption and more aggressive monitoring and recordkeeping. If the rule instead narrows secondary-market exposure, the setup starts to look structural rather than narrative-driven because it preserves the core liquidity function of stablecoins without forcing issuers to police activity they cannot observe, and that is what would make this development matter in practical terms.
