What happened? Coinbase urged the U.S. Treasury to update decades-old anti-money-laundering rules and embrace modern tech like AI, blockchain analytics, APIs, and digital IDs.
Coinbase filed a detailed response saying the Bank Secrecy Act and current AML frameworks are outdated and flood regulators with low-value reports while compromising privacy. The company proposed using AI and know-your-transaction (KYT) analytics, recognizing decentralized IDs and zero-knowledge proofs, and creating regulatory sandboxes and safe harbors. Coinbase argues public–private collaboration and tech-driven solutions will better detect illicit activity than simply tightening enforcement.
Who does this affect? Coinbase’s push impacts crypto exchanges, fintechs, compliance vendors, and regulators who oversee digital asset activity.
Exchanges and custodians would change how they verify customers and monitor transactions if Treasury adopts these recommendations, shifting workload toward analytics and APIs instead of paperwork. Compliance tech providers and blockchain analytics firms stand to gain from broader adoption of KYT and AI tools. Regulators and law enforcement would need new skills and processes to evaluate results-driven systems and participate in sandboxes.
Why does this matter? If regulators move toward tech-first AML, it could lower compliance costs, speed innovation, and alter market dynamics across crypto and traditional finance.
Clearer, modern rules and safe harbors would likely encourage more institutional participation in crypto by reducing regulatory uncertainty and operational friction. Analytics and AI vendors could see increased demand, while exchanges that adopt better tooling may gain competitive advantage and customer trust. At the same time, the shift could change how risk is priced and might trigger new regulatory debates over privacy, oversight, and enforcement standards.