Bank

Harper

DeFi

<h4>Quick Breakdown&nbsp;</h4>
<ul>
 <li style="font-weight: 400;">Coinbase urges Treasury to adopt AI, APIs, and blockchain analytics to enhance AML efforts.</li>
 <li style="font-weight: 400;">Grewal proposes a safe harbor for firms using AI-driven compliance tools under the Bank Secrecy Act.</li>
 <li style="font-weight: 400;">Think tank fellow Jim Harper suggests a law enforcement query system as an alternative to surveillance-heavy models.</li>
</ul>
&nbsp;
<h3 id="span-style-font-weight-400-coinbase-calls-for-tech-driven-aml-reform-span">Coinbase calls for tech-driven AML reform</h3>
Coinbase has urged the US government to embrace blockchain analytics, artificial intelligence (AI), and other emerging technologies to strengthen the fight against financial crime in the digital asset sector.
The <a style="color: #0000ff;" href="https://x.com/iampaulgrewal/status/1980324763470905721?s=46&amp;t=MuRujqZUAz3TQE1vmr3c6A" rel="noopener noreferrer nofollow">appeal</a> came on Monday in a <a style="color: #0000ff;" href="https://assets.ctfassets.net/sygt3q11s4a9/2JiDDSZgdu1zwNlwkLgE24/12b9465b1b96198a702288555713dbd3/Coinbase_Response_to_Treasury_RFC_on_Innovative_Methods_To_Detect_Illicit_Activity_Involving_Digital_Assets__1_.pdf" rel="noopener noreferrer nofollow">letter</a> dated October 17 from Coinbase’s chief legal officer, Paul Grewal, in response to the US Treasury Department’s request for comment on preventing illicit activity in crypto. Grewal argued that money laundering schemes have evolved through advanced technologies — and law enforcement must adapt accordingly.&nbsp;
<h3 id="span-style-font-weight-400-coinbase-pushes-for-safe-harbor-for-ai-powered-compliance-span">Coinbase pushes for safe harbor for AI-powered compliance</h3>
Coinbase’s chief policy officer, Faryar Shirzad, reinforced this stance on X, stating that the US government should “follow crypto exchanges’ example” by using AI, APIs, digital IDs, and blockchain analytics to modernize anti-money laundering (AML) systems.
<blockquote class="twitter-tweet">
 At <a href="https://twitter.com/coinbase?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@coinbase</a>, we’re constantly modernizing our defense systems to protect our customers and national security. The government’s approach to combating financial crime should be no different. That’s why policymakers should embrace innovation to modernize AML with proven digital… <a href="https://t.co/82GfJSzRDs" rel="noopener noreferrer nofollow">https://t.co/82GfJSzRDs</a>
 — Faryar Shirzad <img src="https://s.w.org/images/core/emoji/16.0.1/72x72/1f6e1.png" alt="🛡" style="height: 1em; max-height: 1em;"> (@faryarshirzad) <a href="https://twitter.com/faryarshirzad/status/1980421070239694878?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 20, 2025</a>
</blockquote>

Grewal also proposed a regulatory exception under the BSA for firms deploying AI and API-driven monitoring tools. He suggested that this safe harbor should emphasize governance and performance outcomes rather than impose a rigid, one-size-fits-all model.
He noted that uncertainty around regulations has prevented firms from fully adopting AI in AML processes. Similarly, API use faces challenges like lack of standardization and regulatory fragmentation, which Grewal believes could be addressed through Treasury guidance on acceptable use cases, including data privacy and interoperability standards.
<h3 id="span-style-font-weight-400-coinbase-seeks-clearer-rules-for-blockchain-analytics-span">Coinbase seeks clearer rules for blockchain analytics</h3>
Grewal further urged the Treasury to issue clear rules recognizing and incentivizing decentralized IDs (DIDs) and zero-knowledge proofs (ZKPs) as legitimate tools for customer verification and blockchain-based AML compliance.
He added that regulators should encourage information sharing on illicit blockchain activity without overburdening participants with recordkeeping obligations. The Treasury’s consultation, part of the <a style="color: #0000ff;" href="https://defi-planet.com/2025/03/u-s-lawmakers-introduce-updated-genius-act-to-regulate-stablecoins/" rel="noopener noreferrer nofollow">GENIUS Act</a> mandate, closed last Friday after opening on August 18.
While Coinbase champions innovation-driven compliance, Jim Harper, Senior Fellow at the American Enterprise Institute, proposed a different solution.
In a Monday blog post referencing his September 15 research paper, Harper suggested creating a direct communication system where law enforcement agencies could query crypto companies for investigative data — eliminating the need for extensive surveillance frameworks.
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The post <a href="https://defi-planet.com/2025/10/coinbase-urges-us-treasury-to-leverage-ai-and-blockchain-tools-to-tackle-financial-crime/" rel="noopener noreferrer nofollow">Coinbase Urges US Treasury to Leverage AI and Blockchain Tools to Tackle Financial Crime</a> appeared first on <a href="https://defi-planet.com" rel="noopener noreferrer nofollow">DeFi Planet</a>.

Coinbase Urges US Treasury to Leverage AI and Blockchain Tools to Tackle Financial Crime

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