Crypto exchange Coinbase has called on the U.S. Treasury Department to adopt blockchain analytics, artificial intelligence (AI), and other emerging tools to strengthen efforts against financial crime. The company argues that law enforcement must modernize its methods to keep pace with increasingly sophisticated money-laundering schemes.
In a letter to the Treasury dated October 17, Paul Grewal, Coinbase’s chief legal officer, said that traditional monitoring frameworks are struggling to handle the evolving tactics used in digital asset markets.
“Blockchain and other innovative technologies can counter these emerging risks. Treasury and other policymakers should promote their use to identify and deter illicit activity,” Grewal wrote.
He added that doing so aligns with the Anti-Money Laundering Act of 2020, which aimed to modernize the Bank Secrecy Act for the digital age.
Coinbase’s chief policy officer, Faryar Shirzad, also emphasized that the U.S. should “embrace innovation to modernize AML with proven digital tools like AI, APIs, digital IDs, and blockchain analytics.”
Regulatory Clarity Needed for AI and API Tools
Grewal proposed a regulatory exception under the Bank Secrecy Act for companies deploying AI-driven and API-based monitoring systems, arguing that a “safe harbor” would encourage responsible innovation.
He noted that unclear guidance has slowed adoption of AI and API tools in compliance programs. Establishing standards for data privacy, interoperability, and governance, he said, would help companies integrate these systems more effectively.
Coinbase also urged Treasury to recognize decentralized digital IDs and zero-knowledge proofs as valid verification mechanisms.
Grewal argued that clearer rules on blockchain identity solutions could enhance compliance while protecting user privacy, allowing better information sharing about illicit blockchain activity without overburdening participants.
Meanwhile, Jim Harper, a senior fellow at the American Enterprise Institute, suggested creating a direct communication network between crypto firms and law enforcement to improve investigations without expanding surveillance.
The proposals highlight a growing consensus that blockchain, once viewed as a risk, could become a vital tool in safeguarding the global financial system.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.