- Coinbase asks U.S. regulators to update AML systems by including blockchain analytics, artificial intelligence, and API-driven solutions to better monitor illegal crypto operations.
- Paul Grewal suggests strict rules that develop a safe-harbor structure of companies utilizing AI and API, and to make certain that innovation fits within the compliance criteria related to the Bank Secrecy Act.
- Industry calls are wider, with professionals suggesting new communication schemes directing law enforcement access to crypto companies, and in a bid to create equilibrium between privacy and enforcement effectiveness.
Cryptocurrency exchange Coinbase has called on the U.S Treasury Department to update anti-money laundering (AML) operations with blockchain analytics, artificial intelligence, and other innovative technologies. The company gave its recommendations following the request of the Treasury to receive public opinions on how to counter illicit finance innovatively using digital assets. Coinbase noted that traditional systems are not efficient in fighting more sophisticated financial crimes.
Active Technological Modernization.
The chief legal officer of Coinbase, Paul Grewal, said that police needed to embrace the use of sophisticated digital devices that would identify and prevent monetary fraud. He claimed that new technologies, including blockchain analytics and decentralized verification systems, could reinforce compliance systems. Thus, Coinbase thinks that the adoption of innovation is consistent with the purpose of the Anti-Money Laundering Act of 2020, which sought to revise the Bank Secrecy Act.
Additionally, Grewal urged Treasury officials to market tools that enhance real-time detection of suspicious transactions. He wrote that technology has been used to conceal criminal activities by financial criminals, and they necessitate regulators to catch up. Therefore, Coinbase encouraged policymakers to endorse technology-oriented approaches to augment transparency and protection in the crypto industry.
Regulatory Clarity for AI and API Tools
Coinbase also called for regulatory clarity on the use of artificial intelligence and Application Programming Interfaces (APIs) in AML monitoring. Grewal proposed creating a safe-harbor provision for firms deploying AI-driven compliance tools under specific governance standards. This approach, he said, would incentivize responsible innovation while ensuring consistent oversight.
Additionally, Coinbase warned that inconsistent API standards and fragmented regulations hinder effective data integration. Clearer rules, the company suggested, would encourage firms to adopt secure, interoperable systems that enhance information sharing. By clarifying acceptable use cases, regulators could promote a stronger and more unified AML framework.
Broader Industry Perspectives
Coinbase’s policy chief, Faryar Shirzad, supported the proposal and urged Washington to follow crypto firms’ lead in technological adoption. He has claimed that digital devices such as AI, APIs, and blockchain analytics should be incorporated into the financial oversight systems of the government. His role supports the stance of Coinbase to promote regulatory modernization of digital assets.
Meanwhile, the American Enterprise Institute’s Jim Harper proposed a communication system allowing law enforcement to directly query crypto companies. He argued this system could replace broad financial surveillance while maintaining enforcement capabilities. The Treasury will review these recommendations as it prepares new guidance under the GENIUS Act.
