Coinbase Seeks AI, Blockchain Integration for Crypto Anti-Money Laundering Compliance
Coinbase has submitted a 30-page response to the US Treasury, under the GENIUS Act, emphasizing that the Bank Secrecy Act (BSA) is outdated for digital assets. Chief Legal Officer Paul Grewal highlights the need for modern tools to combat advanced crypto crimes.
AI and Blockchain Solutions
- Coinbase proposes BSA safe harbors for AI and API-based compliance systems.
- These solutions aim to improve governance, reduce false positives, and ensure privacy.
- Technologies like zero-knowledge proofs and decentralized IDs are suggested for efficient user verification.
KYT and Regulatory Sandboxes
- Coinbase supports know-your-transaction (KYT) blockchain analytics to better track asset flows.
- KYT is seen as more effective than traditional reporting methods that overwhelm regulators.
- The firm urges the creation of regulatory sandboxes to test public-private compliance models.
Ties to 2020 AML Act
- The proposals align with the 2020 Anti-Money Laundering Act's aim to update the BSA.
- Current AML systems produce excessive, low-value data, according to Coinbase.
- AI and blockchain are presented as means to tackle sophisticated crimes while fostering innovation.
The US Treasury's response to these proposals is pending.