Crypto Regulation: Coinbase Executives Make Another Case For Policy Upgrade

Key Insights:

• Coinbase calls for updates to the Bank Secrecy Act and digital ID rules.
• Executives link modern crypto regulation to national security and innovation.
• Fintech groups defend open banking and consumer data access rights.

Coinbase Global Inc. executives are urging the U.S. government to update crypto regulation provisions in the country.

In comments shared on social media, they asked for clearer policies to fight financial crime and support innovation.

Notably, they also joined fintech groups calling for stronger open banking and data rights.

Coinbase Outlines Four Key Crypto Regulation Reforms

Coinbase Chief Legal Officer Paul Grewal said that financial crime is changing fast and that new tools are needed to keep up.

He explained that the company filed a response to the U.S. Treasury’s call for ideas on how to detect illegal activity involving digital assets.

In his post on X, Grewal shared four main ideas for improving the system.

First, he said there should be a “safe harbor” in the Bank Secrecy Act for companies that use artificial intelligence responsibly to improve anti-money laundering work.

He said rules should focus on how the tools are used and what results they bring, not just the methods.

Secondly, he said the government should give guidance on how companies can use APIs to strengthen compliance programs.

These rules would help define how to use customer data safely and how to make sure different systems can work together.

His third proposal calls for updating customer identification rules. He said digital methods like decentralized IDs and zero-knowledge proofs should count as valid forms of identity verification.

These tools could make it easier to confirm who is behind a transaction while keeping privacy in place.

The fourth idea focuses on improving transaction screening. Grewal said the Treasury should support the use of blockchain analysis.

In addition, Know-Your-Transaction tools because they give a clearer picture of how funds move on the blockchain.

He said these methods can spot risks earlier than traditional systems.

Coinbase Connects Regulation to National Security

Coinbase’s Chief Policy Officer Faryar Shirzad supported Grewal’s message.

He said the company is always improving its systems to protect customers and national security.

Shirzad added that the government should do the same by using proven digital tools such as AI, APIs, digital identification, and blockchain tracking.

He said keeping outdated systems in place makes it harder to stop new types of financial crime.

By working with new technology, crypto regulation enablers could make compliance more effective without slowing down innovation.

Shirzad said this approach would also help the U.S. stay competitive in global finance. Coinbase’s leaders said they are not asking for fewer rules but for clearer and more modern ones.

They said smarter crypto regulation approach would help both the industry and the government.

The focus, they said, should be on results, not on punishing firms that are trying to do the right thing.

Groups Defend Open Banking and Consumer Data Rights

In a separate update, several crypto and fintech groups are pushing the government to support open banking.

They said large banks are trying to limit consumer access to their own financial data.

The Blockchain Association, Crypto Council for Innovation, and Financial Technology Association sent a letter to the Consumer Financial Protection Bureau (CFPB) asking it to stand by the open banking rule.

The rule, approved last year, requires banks and credit unions to let customers share their data with approved third parties.

Notably, the Bank Policy Institute, which represents major banks, filed a lawsuit claiming that the rule risks privacy. The CFPB paused the case in July while it reviews the rule.

The advocacy groups said that without open banking, consumers would lose choice, and competition would shrink.

They said that data belongs to the public, not to the banks. It was also stated that open banking would help the U.S. match other countries, such as the United Kingdom, Singapore, and members of the European Union.

These are places where people already have the right to access and share their financial data.

The letter warned that without strong data-sharing rules, the country could fall behind in innovation and technology.

The groups said that financial progress depends on fair access to data and modern tools.