A Hyperliquid-backed advocacy group and crypto venture firm Paradigm have jointly submitted comments to US regulators, urging them to revise a proposed anti-money-laundering (AML) rule. According to a report by The Block (June 9, 2026), the core concern for both parties is that the draft, as currently worded, could restrict the free circulation of decentralized stablecoins on public blockchains. This is not a law already in effect — it is a proposed rule still at the public-comment stage. The key words here are “proposed” and “public chain.”
Editorial Take: What This Means for USDT Card Users
Bottom line first: if you already hold a USDT card, there is nothing you need to do right now.
The point of contention in this story is “decentralized stablecoins circulating on public chains.” For the vast majority of USDT virtual card users, the funding path looks like this: “centralized exchange / custodial wallet → issuer’s top-up address → card.” Every link in that chain is already a KYC/AML-regulated entity, and none of it sits in the gray area targeted by this draft.
Breaking it down by card type:
- Custodial-route cards (Bybit Card, exchange-issued cards) — users complete KYC on the exchange, and on-chain transfers are handled by the platform. This draft targets the protocol layer, not end users, so the odds of any impact reaching these cards are low.
- Multi-chain top-up aggregator cards (MPCard’s Asia Elite variant supports ₮ top-ups across multiple public chains) — in theory, tighter rules on “public-chain USDT circulation” could affect which chains a top-up channel supports, but that depends on whether the final rule targets an issuer’s compliant receiving addresses specifically, rather than public-chain transfers in general.
- On-chain native cards (solutions like RedotPay that emphasize on-chain self-custody) — this is the group that should watch the rule’s direction most closely, since their selling point is precisely “direct public-chain connection.”
Expected timeline: within 7 days, no change at all; within 30 days, watch whether FinCEN extends or closes the comment period; within 90 days, we may see whether the rule advances to the next stage or gets revised. The path from draft to enforceable rule in the US regulatory process typically takes quarters, if not years.
Historical Comparison: How This Differs From 2023 and 2024
This is easier to parse against the timeline of past events.
- 2023 USDC depeg: That was a market-risk event (Circle’s reserve exposure at Silicon Valley Bank), which shook confidence in the stablecoin’s redemption itself and had nothing to do with regulatory wording. This time, it is purely a policy-level standoff — the reserves and redeemability of USDT itself have not been questioned.
- 2024 SEC enforcement against exchanges: That targeted the question of whether a token is a security, landing on exchange-listing conduct. This time, the target is the on-chain transfer layer and decentralized protocols — closer to the logic OFAC applied when it sanctioned Tornado Cash in 2022, targeting a protocol rather than individuals.
- The similarity: both are cases of regulators trying to put a gate on the flow of on-chain funds. The difference: this one is still a draft, and it has run into direct pushback from a heavyweight institution like Paradigm — drafts overturned or substantially revised during the comment period are not historically rare.
In other words, this is a policy tug-of-war that hasn’t concluded, not a fait accompli. Treating it like a USDC-depeg-style event that “immediately affects your wallet balance” would be a misreading.
Regulatory Boundaries: Clearly Prohibited vs. Gray Area
The current boundaries break down as follows:
- Clearly permitted: topping up a virtual card with USDT through a licensed issuer after completing KYC — this is the compliant, regulated path, and it is not shaken by this draft. US users can refer to the US compliance guide for the licensed-entity framework.
- Gray area: fully self-custodied stablecoin use, going direct via public chains and bypassing any KYC checkpoint — this is exactly the zone the proposed rule aims to constrain, and it’s the “permissionless circulation” that the Paradigm and Hyperliquid camp is defending.
- Clearly prohibited: laundering funds through sanctioned addresses or mixing protocols — this was already placed off-limits by OFAC back in 2022 and is not new territory introduced by this rule.
For the average USDT card user, you’re on the first, compliant path — whether the rule is revised or not doesn’t change how you use your card today. For local frameworks in Hong Kong and Singapore, see Hong Kong compliance and Singapore compliance; neither has, so far, followed with a similar public-chain restriction proposal.
Milestones Worth Watching Next
- FinCEN’s comment-period deadline — this determines whether objections get incorporated. Keep an eye on the rulemaking notices page on the FinCEN website.
- Whether the draft advances to a “final rule” — the key step from “proposal” to “binding,” which usually comes with a transition period.
- Official statements from stablecoin reserve issuers like Tether / Circle — if the major stablecoin issuers speak up, it will directly shape expectations for issuance channels.
- Whether mainstream issuers adjust their supported top-up chains — if any card suddenly drops support for certain public chains, that’s the real signal that the rule’s impact has reached end users.
Editorial Recommendations
- If you already hold any USDT virtual card: no action needed. This is a draft-stage dispute, not a redemption crisis — your balance and top-up method are unchanged.
- If you’re planning to apply for a new card: prioritize solutions that route through licensed, KYC’d top-up paths (such as the MPCard review or exchange-issued cards like Bybit Card) — these have the longest and most indirect exposure to any rule change. For a side-by-side comparison, see the top 5 USDT cards of 2026.
- If you rely on a purely on-chain, self-custodial route: you’re the only group that needs to keep watching closely — put FinCEN’s comment-period deadline on your calendar, and wait for the final wording before deciding whether to adjust your setup.
- What not to do: don’t panic-sell USDT into other assets just because of a draft-rule headline, and don’t believe any exaggerated claim that “public-chain USDT is about to be banned outright” — the draft’s language is nowhere near that point.
We will update this article as soon as the rule advances to its next stage or major issuers adjust their supported top-up chains.