Coinbase has urged US regulators to update how they fight financial crime in the crypto space, arguing modern tools can give law enforcement clearer leads while cutting low-value paperwork for honest firms.
According to a letter dated October 17, 2025, the company asked Treasury officials to accept new approaches that use blockchain analytics, artificial intelligence, APIs, decentralized identifiers and privacy-preserving proofs.
The filing is part of a public comment process tied to a Treasury notice seeking ideas on “Innovative Methods to Detect Illicit Activity Involving Digital Assets.”
In the submission, which runs about 30 pages, Coinbase’s Chief Legal Officer Paul Grewal proposed several practical steps. Reports have disclosed requests for safe-harbor testing zones where firms could try new monitoring tools without immediate enforcement risk.
The company asked Treasury to recognize decentralized IDs and zero-knowledge proofs as valid ways to verify customers, and to support standardized APIs so exchanges and regulators can share the right data.
Grewal wrote, “When bad guys innovate in financial crime, good guys need innovation to keep pace.” That line was used to underline the company’s point that traditional, form-driven reporting can miss real threats.
The firm argued a results-based approach would focus on outcomes — like whether illicit activity was actually detected and stopped — instead of forcing specific, often outdated methods on every actor.
Coinbase told Treasury it wants fewer blanket data grabs and more targeted, meaningful reporting — a move it says would protect privacy while improving enforcement.
Featured image from Gemini, chart from TradingView
