Paradigm submits comment letter to the U.S. Treasury Department regarding state-level regulatory path for the GENIUS Act

ChainCatcher reports, according to the official blog, Paradigm has submitted a comment letter to the US Department of the Treasury regarding rulemaking for the state-level regulatory pathway under the GENIUS Act. Paradigm supports the core framework of the proposal but points out that, unless four issues are amended, state-level channels will not effectively serve issuers. First, the proposal anchors the federal framework to OCC regulations that have not yet been finalized, requiring states and issuers to plan against an undetermined benchmark, directly hindering market access; the Treasury should not finalize this rule before OCC implementation rules are finalized. Second, the proposal requires unanimous agreement from the heads of the Treasury, the Federal Reserve, and the FDIC to certify state systems, but does not set a decision deadline, a standard for explaining vetoes, or a mechanism to prevent any single member from indefinitely blocking certification. Paradigm suggests establishing a 180-day decision deadline, creating a process for supplemental amendments, and requiring specific explanations for vetoes. Third, the proposal mandates state systems to require 12 months’ operating expenses in reserve funds, which may crowd out early-stage issuers; it is recommended that states be allowed to adjust reserve requirements based on issuer scale and risk profile. Fourth, the proposal fails to sufficiently preempt hostile actions by individual states, and this loophole must be addressed.