Coinbase Urges US Treasury to Adopt AI and Blockchain for Crypto AML Compliance

Coinbase filed a 30-page response to the US Treasury on October 17, 2025, under the GENIUS Act. The Bank Secrecy Act (BSA), a 1970 law requiring financial institutions to report suspicious activities, fails digital assets, Coinbase claims. Chief Legal Officer Paul Grewal stressed modern tools must counter advanced crypto crimes. AI and Blockchain Solutions Coinbase seeks BSA safe harbors for AI and API-based compliance systems. These focus on governance, cut false positives, and protect privacy. Zero-knowledge proofs and decentralized IDs streamline user verification. “Criminals innovate; we must too,” Grewal posted on X. KYT and Regulatory Sandboxes Coinbase advocates know-your-transaction (KYT) blockchain analytics to track asset flows. KYT surpasses outdated reporting that overwhelms regulators. Anti-Money Laundering (AML), the framework to stop illegal funds entering financial systems, needs modernization, Coinbase argues. The firm urges Treasury to endorse KYT and create sandboxes for testing public-private compliance models. Ties to 2020 AML Act The proposals support the 2020 Anti-Money Laundering Act’s goal to update BSA. Current AML systems generate excessive, low-value data, Coinbase claims. AI and blockchain could curb sophisticated crimes without hindering innovation. Treasury’s response is pending.