Leading cryptocurrency exchange Coinbase has formally called upon the U.S. Treasury Department to overhaul what it describes as ‘broken’ anti-money laundering (AML) frameworks currently governing digital assets. In detailed submissions to federal regulators, the exchange emphasized that existing compliance systems fail to address the unique technological characteristics of blockchain-based financial ecosystems.
The comprehensive proposal advocates for three fundamental regulatory advancements: establishing clear safe harbor provisions for emerging technologies, formal recognition of blockchain analytics tools as compliance mechanisms, and broader integration of privacy-enhancing protocols like zero-knowledge proofs. These technical solutions, Coinbase argues, would enable more effective crime prevention while supporting legitimate innovation.
Industry analysts note that current AML regulations, originally designed for traditional banking, often prove inadequate for monitoring cryptocurrency transactions. Blockchain’s inherent transparency actually provides superior traceability compared to conventional financial systems when paired with appropriate analytical tools.
Coinbase’s recommendations come amid increasing regulatory scrutiny of digital asset platforms and growing concerns about cryptocurrency-related financial crimes. The exchange maintains that adopting these technological frameworks would strengthen law enforcement capabilities while fostering responsible industry growth. Treasury officials have acknowledged receiving the proposal but haven’t indicated when or if regulatory changes might be implemented.
