Coinbase Tells U.S. to Get with the Times and Use Blockchain to Fight Crypto Crime

by

Coinbase tells the U.S. government to finally catch up and use blockchain, AI, and APIs to tackle crypto crime. Wow, groundbreaking.

 

So here we go again. Coinbase, the digital exchange that’s not exactly known for subtlety, is asking the U.S. government to “adopt blockchain technology, artificial intelligence, and digital tools.” You know, the stuff that’s been around for a while but apparently the government missed the memo on. Why? Well, to help law enforcement get a handle on crypto-related crime, of course. They submitted a formal response to the U.S. Treasury’s request for comments on how to stop people from using digital assets to do bad things. So much for keeping things simple, right?

In a letter, dated October 17, Coinbase’s Chief Legal Officer, Paul Grewal, goes on to say that criminal networks are using fancy tech to launder money. “Shocking,” he says. As if this wasn’t the whole point of cryptocurrency in the first place. So, apparently, law enforcement needs to “evolve” its tools. Okay, sure, buddy. Maybe get some new gadgets or something.

“Blockchain and other innovative technologies can counter these emerging risks,” Grewal declares like he’s just invented fire or something. Calm down, Paul. It’s just blockchain.

He also throws in that blockchain analytics and other digital tools line up with the goals of the Anti-Money Laundering Act of 2020. I mean, yeah, that’s kind of the idea, right? Modernize and stop criminals from doing shady stuff. Who would’ve thought?

Meanwhile, Faryar Shirzad, Coinbase’s Chief Policy Officer, hops on X (formerly Twitter) to agree with Grewal, saying that the U.S. should follow crypto firms’ lead and start using AI, APIs, and blockchain analytics. Because clearly, we’re all experts in this stuff now. I mean, who needs human intervention when you have tech, right? 😏

Tech-Savvy Crime Fighting, But With Less Rules, Please

Now, Coinbase isn’t just asking for tech, they’re also asking for some exceptions to the Bank Secrecy Act. Apparently, they want the Treasury to “create regulatory exceptions” for companies using AI and API-driven tools. Grewal’s big idea? A safe-harbor framework that focuses on outcomes instead of putting everyone in the same boring compliance box. That’s right, no more “one-size-fits-all.” We’re all special snowflakes now.

First: Establish a regulatory safe-harbor under the Bank Secrecy Act for firms who responsibly deploy AI to improve AML compliance programs, including their transaction monitoring and SAR reporting. The conditions for that safe-harbor should focus on governance and outcomes, as…

– paulgrewal.eth (@iampaulgrewal)

Grewal even mentions that companies are a little hesitant to use AI because, you know, the rules are a little fuzzy. And APIs? Don’t even get him started. Too many challenges with “regulatory fragmentation” and a lack of standardization. Whatever that means. But, hey, Coinbase has a solution: the Treasury should just hand out some clear guidelines. Easy peasy, right?

Blockchain: The New ID Card for Your Crypto Needs

But wait, there’s more! Coinbase also wants the Treasury to accept decentralized identity (DID) systems and zero-knowledge proofs as valid tools for customer verification. Because, why not? Why deal with old-school ID methods when you can just trust the blockchain to know who you are? It’s not like anyone’s using it to steal identities or anything…

Grewal also asks for some updated guidance to avoid overburdening users with too much paperwork. You know, because dealing with crypto is already so easy. He wants companies to share illicit activity data, but don’t worry, privacy and efficiency are still top priorities. Sounds like a recipe for success, right?

Other People Have Different Ideas. Shocking!

So while Coinbase is all about digital tools, others have a… let’s say, less tech-heavy approach. Jim Harper from the American Enterprise Institute suggests a direct communication system between crypto firms and law enforcement. Yes, an old-school communication system-like the phone, maybe? The nerve! He thinks it’ll help investigations without having to spy on everyone’s financial habits.

Now, this is really where it gets fun. Harper’s proposal says this could protect privacy while still helping law enforcement crack down on crime. He’s got a point, though. It’s just a little less futuristic than what Coinbase is pushing. But who needs balance when you have blockchain?

Oh, and just to wrap it all up, the Treasury closed its comment window on October 18. So that’s it for now. They’ve heard all the ideas and are probably wondering what the hell they just read. But hey, no pressure.

Read More

2025-10-21 14:48