Coinbase has called on the U.S. Treasury Department to modernize anti-money laundering (AML) regulations, saying decades-old frameworks like the Bank Secrecy Act (BSA) are no longer effective in dealing with the rapidly changing world of digital finance.
Key points to remember:
- Coinbase is urging the U.S. Treasury to update outdated anti-money laundering rules, arguing that current frameworks fail to manage risks.
- The company recommends using AI, APIs, and blockchain analytics to more effectively detect illicit activities.
- Coinbase offers regulatory sandboxes and safe harbors to encourage innovation.
Instead of relying on stricter enforcement, the company says innovation through blockchain analytics and artificial intelligence should form the foundation of future financial crime prevention.
“When the bad guys innovate in financial crime, the good guys need innovation to keep pace,” Paul Grewal, Coinbase’s chief legal officer, said in an article accompanying the exchange’s 30-page response to Treasury’s request for comment on “Innovative Methods for Detecting Illicit Activity Involving Digital Assets.”
Coinbase calls US AML rules obsolete
Coinbase’s filing describes the current AML system as outdated and inefficient, noting that it often floods regulators with low-value reports while requiring companies to store excessive amounts of customer data.
The company says this approach compromises privacy and fails to deter sophisticated criminal operations.
Instead, Coinbase offers a results-driven approach that leverages modern technologies to improve monitoring and enforcement.
Among its key recommendations, Coinbase urged Treasury to establish regulatory “safe harbors” for companies using AI and API-based compliance tools, recognize decentralized identifiers and zero-knowledge proofs as legitimate forms of customer verification, and promote blockchain know-your-transaction (KYT) analytics as a superior alternative to traditional reporting.
“Blockchain and other innovative technologies can counter these emerging risks,” Grewal wrote, adding that Treasury should actively promote the adoption of digital tools to identify and deter illicit activity.
He said this would be consistent with the goals of the Anti-Money Laundering Act of 2020, which sought to modernize the BSA.
Coinbase also called for regulatory sandboxes to allow exchanges and agencies to jointly test compliance innovations before formal implementation.
The company believes that public-private collaboration could accelerate progress and provide clearer guidance for companies seeking to deploy AI or blockchain-based tools in AML systems.
Faryar Shirzad, Coinbase’s chief policy officer, echoed this sentiment, writing that the government should “follow in the footsteps of crypto exchanges” by embracing innovation rather than resisting it.
“Modernize AML with proven digital tools such as AI, APIs, digital IDs and blockchain analytics,” he urged.
HAS @coinbaseWe are constantly modernizing our defense systems to protect our customers and national security. The government’s approach to tackling financial crime should be no different. This is why policymakers should embrace innovation to modernize the fight against money laundering with proven digital… https://t.co/82GfJSzRDs
—Faryar Shirzad
(@faryarshirzad) October 20, 2025
(@faryarshirzad) Top Crypto CEOs to Meet with Senate Democrats as Crypto Bill Discussions Stall
As reported, a high-profile meeting between top crypto executives and Senate Democrats is scheduled for Wednesday, led by Senator Kirsten Gillibrand, in an effort to jumpstart progress on long-delayed U.S. crypto market structure legislation.
Gillibrand, one of the few Democrats to speak out in favor of clearer regulation for digital assets, co-sponsored the Responsible Financial Innovation Act with Senator Cynthia Lummis and remained a central figure in bipartisan crypto policy efforts.
Executives from Coinbase, Chainlink, Ripple, Galaxy Digital, Uniswap, Circle, Kraken, a16z Crypto, Jito and the Solana Policy Institute are expected to attend the closed-door roundtable, according to journalist Eleanor Terrett.
The discussions come amid deep partisan divisions in Congress, with competing bills from Democrats and Republicans outlining different visions for regulating crypto assets and granting oversight to the SEC and CFTC.
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