Coinbase has submitted a 30-page opinion to the U.S. Treasury on October 21st, calling for a major modernization of Bank Secrecy Act (BSA) regulations to better accommodate the digital asset landscape.
The core of their proposal is a critique of the current rules as outdated and inefficient, which hampers effective data handling and compliance. Coinbase’s suggested solutions emphasize technology-driven compliance, specifically urging regulators to recognize and integrate:
- Decentralized IDs
- Zero-Knowledge Proofs
- AI and API Monitoring Tools (via a proposed “safe harbor” approach)
This initiative is designed to create a more effective regulatory framework by encouraging a “regulatory sandbox” for public-private cooperation and reducing low-value compliance reporting.
Coinbase views this proactive proposal as an innovation-centered alternative to a pending Senate draft bill that the company believes could unfairly restrict decentralized finance (DeFi) and crypto wallet development.
Paul Grewal, Coinbase’s Chief Legal Officer, stated that “Modernizing the Bank Secrecy Act is crucial for adapting to the rapidly evolving landscape of digital assets. We believe technology can enhance compliance and create a more effective regulatory framework.”
While the crypto community is anticipating an official response, the move solidifies Coinbase’s position as a proponent of tech-forward regulatory reform rather than restrictive measures that could impede the growth of DeFi.
October 2025, Cryptoniteuae
