PANews reported on June 3 that, according to its official blog, Paradigm has submitted a letter of comment to the U.S. Treasury Department regarding the development of state-level regulatory pathway rules under the GENIUS Act. Paradigm supports the core framework of the proposal but points out that without addressing four key issues, state-level pathways will not effectively serve issuers.

• First, the proposal anchors the federal framework to the yet-to-be-finalized OCC regulations, requiring states and issuers to plan for undetermined benchmarks, directly hindering market access. The Treasury Department should not finalize the OCC implementation rules before they are finalized.
• Second, the proposal requires unanimous agreement from the heads of the Treasury, the Federal Reserve, and the FDIC for certifying state-level systems, but it lacks a decision-making timeframe, standards for interpreting vetoes, or a mechanism to prevent a single member from indefinitely blocking certification. Paradigm recommends setting a 180-day decision-making period, establishing a supplementary submission process, and requiring specific explanations for vetoes.
• Third, the proposal requires state-level regulations mandating 12 months of operating expense reserves, which could crowd out early issuers. It is suggested that states be allowed to adjust reserve requirements based on issuer size and risk profile.
• Fourth, the proposal failed to adequately address hostile actions in individual states, and this loophole must be filled.