Re: Notice of Proposed Rulemaking — AML & Sanctions Compliance Framework for Permitted Payment Stablecoin Issuers under the GENIUS Act

Director Andrea Gacki, Financial Crimes Enforcement Network
Director Bradley T. Smith, Office of Foreign Assets Control
U.S. Department of the Treasury
2070 Chain Bridge Road
Vienna, VA 22182

Re: Notice of Proposed Rulemaking — AML/CFT and Sanctions Compliance for Permitted Payment Stablecoin Issuers, 91 Fed. Reg. (April 8, 2026); Docket FINCEN-2026-0006 / OFAC-FR-2026-08

Dear Directors Gacki and Smith,

Hive Civilization, Inc. ("Hive") respectfully submits this comment letter in response to the Notice of Proposed Rulemaking (the "Proposed Rule") implementing the anti-money laundering, countering the financing of terrorism, and sanctions compliance provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the "GENIUS Act") for Permitted Payment Stablecoin Issuers ("PPSIs").

Hive is the developer of a cryptographic receipt and compliance infrastructure designed expressly for high-frequency stablecoin and agentic payment flows. We operate the Hive Receipt Engine, the Hive Compliance Dashboard, the Hive Regulator API, and the Hive Multichain Anchor — collectively the reference implementation of the Travel Rule, sanctions-screening, and audit-trail obligations described in the Proposed Rule. Our infrastructure is in production today, signs receipts under ML-DSA-65 post-quantum signatures and Ed25519 dual-signature, and operates at sub-cent per-receipt cost across eleven blockchain networks including Ethereum, Base, Solana, Stellar, and Circle Arc.

We write to commend the Proposed Rule's careful balance of supervisory rigor and operational pragmatism, and to offer four implementation observations drawn from our work building this infrastructure for the live stablecoin market. We address them in the order presented in the Proposed Rule.

I. The Proposed Rule correctly identifies the architectural choice: technical capabilities, not paperwork

The Proposed Rule's most consequential design choice is its preference for technical capabilities over expanded reporting obligations. Section II.B explicitly scopes out secondary-market SAR obligations on the basis that "the burden of requiring PPSIs to file SARs on secondary market transfers would outweigh the likely benefits, particularly given that PPSIs may have limited information about transactions occurring solely via smart contract interactions." Instead, the Rule requires PPSIs to "maintain technical capabilities to identify, block, and/or reject transactions that may violate U.S. sanctions" across both primary and secondary markets.

This is the correct architecture. SAR filing on every secondary-market USDC transfer would generate hundreds of millions of low-signal reports per quarter and would not provide actionable intelligence. Real-time, on-chain, cryptographically-attested blocking and freezing capabilities are the only operationally meaningful compliance posture for stablecoin issuers at the scale this market now operates.

We respectfully suggest that the final rule make explicit, in a non-binding implementation note or interpretive guidance, that PPSIs may satisfy the technical-capabilities requirement by integrating third-party compliance infrastructure that provides:

• Cryptographically-signed receipts of every primary and secondary market settlement event, retained for the minimum five-year record-keeping period;
• Real-time, on-chain blocking and freezing capabilities triggered by automated screening against the OFAC Specially Designated Nationals List, FinCEN 311 designations, and lawful orders;
• Per-transaction Travel Rule data exchange compliant with FATF Recommendation 16 for transactions at or above the $1,000 threshold; and
• An auditable, read-only supervisory interface accessible to FinCEN and OFAC examiners on request.

Hive operates this exact infrastructure today. We believe similar third-party stacks will emerge from other compliance vendors. The final rule should not foreclose this model by implying that PPSIs must build compliance infrastructure in-house.

II. Secondary-market sanctions screening is technically tractable today

The Proposed Rule's most novel requirement — sanctions compliance on secondary-market activity "when PPSIs exercise possession or control of such stablecoins through smart contracts" — has been characterized in some quarters as technically infeasible. It is not. The relevant technical primitives have been deployed in production for more than thirty-six months.

Specifically:

1. On-chain freeze functionality is already implemented in every major fiat-backed stablecoin smart contract (USDC, USDP, PYUSD, USDT). Smart contract blocklist() and freeze() functions execute on-chain in a single block. Tether's April 23, 2026 freeze of $344 million across two TRON wallets is the most recent at-scale demonstration.
2. Real-time SDN list screening on stablecoin transfer events is operational today through several vendors (Chainalysis, TRM Labs, Elliptic) and through the Hive Regulator API. Median screening latency in our production environment is under 80 milliseconds per transfer.
3. Cryptographically-signed audit receipts proving that a screening event occurred, that a specific list version was consulted, and that the resulting block-or-allow decision was applied, can be generated at sub-cent cost. The Hive Receipt Engine produces such receipts under dual ML-DSA-65 and Ed25519 signature today.

The implementation question is not whether these capabilities exist. It is which entity is responsible for ensuring they are in place. The Proposed Rule answers this correctly: the PPSI is responsible, the PPSI may delegate to vendors, but the PPSI must be able to demonstrate the capability to its supervisor on examination.

III. The "limited information" carve-out should be tightened to avoid creating a structural compliance arbitrage

Section II.B exempts PPSIs from SAR filing on secondary-market transactions "particularly given that PPSIs may have limited information about transactions occurring solely via smart contract interactions." We agree with the conclusion but respectfully suggest the rationale invites a structural arbitrage.

A PPSI that chooses not to integrate available compliance infrastructure will, by that choice, have "limited information" about secondary-market activity. A competing PPSI that integrates the Hive Receipt Engine, Chainalysis, or equivalent will have full information. The Proposed Rule's exemption rewards the first behavior and burdens the second.

We recommend the final rule clarify that the "limited information" exemption applies only where the PPSI demonstrates, in its written AML program, that no commercially-reasonable technical means exists to obtain such information. As of May 2026, such means exist for every transaction class in the U.S. stablecoin market. The carve-out should accordingly be construed narrowly.

IV. On agentic and machine-to-machine payment flows — a new class of compliance risk the Proposed Rule does not yet address

Between the date of the Proposed Rule's publication (April 8, 2026) and the close of the comment period (June 9, 2026), the largest U.S.-regulated stablecoin issuer launched a production agentic payment stack permitting autonomous AI agents to hold USDC, sign payment authorizations, and settle transactions without human review. Other PPSIs are expected to launch similar capabilities in 2026 and 2027.

Agentic stablecoin payment flows present three compliance risks not contemplated in the Proposed Rule:

1. Identity of the principal. Where an AI agent transacts on behalf of an underlying human or institutional principal, Travel Rule and customer-identification obligations attach to that principal, not to the agent. The Proposed Rule does not address how PPSIs should validate the agent-to-principal binding. We recommend the final rule require PPSIs to ensure that every agent transacting on their rail carries a verifiable cryptographic credential — an "agent passport" — that ties the agent to a known, KYC-verified principal.
2. Velocity-based AML risk. Agentic flows operate at machine speed and can execute thousands of sub-cent transactions per second. Traditional velocity-based AML rules are not calibrated for this regime. We recommend the final rule clarify that PPSIs may use aggregated, time-windowed screening on batched agent payments provided that the aggregation methodology is documented in the PPSI's written program and that individual receipts remain individually retrievable on supervisory request.
3. Cross-border autonomous settlement. Agents transacting across jurisdictions raise novel sanctions-evasion vectors that the Proposed Rule's text-based screening framework does not directly address. We recommend the Treasury convene a working group of PPSIs, compliance infrastructure providers, and academic researchers to develop specific technical guidance on agentic cross-border flows in advance of the final rule's effective date.

V. On the effective date

The Proposed Rule contemplates an effective date twelve months after issuance. We support this timeline. Twelve months is sufficient for PPSIs to integrate available third-party compliance infrastructure, complete supervisory examinations of that infrastructure, and bring their written AML programs into full conformity. It is not sufficient for any PPSI to build the underlying technical capabilities from scratch. The twelve-month timeline thus implicitly endorses the third-party-vendor model described in Section I above. We recommend the final rule make this implication explicit.

VI. Summary and offer of technical assistance

Hive Civilization, Inc. supports the Proposed Rule. We believe its preference for technical capabilities over expanded reporting, its targeted secondary-market scope, and its twelve-month effective date represent a careful and operationally workable framework for the U.S. stablecoin market as it now exists.

We respectfully offer Treasury staff a no-cost technical demonstration of the Hive Receipt Engine, Compliance Dashboard, and Regulator API at the time and place of your convenience. We can provide live integration walkthroughs with any PPSI on the OCC, NYDFS, or state-licensed Money Transmitter list, and can produce sample supervisory reports in the formats specified by Section IV.C of the Proposed Rule on demand.

We thank the Directors and their staffs for the diligence and craft evident in the Proposed Rule.