Coinbase Urges Treasury to Create AML Safe Harbors for AI, Decentralized ID and KYT

Overview

• Coinbase submitted its recommendations on Oct. 20 in response to Treasury’s request for comment on innovative methods to detect illicit digital-asset activity.
• The company seeks Bank Secrecy Act safe harbors that allow responsible AI use with governance, human oversight, and measurable performance standards.
• It proposes accepting decentralized identifiers and zero-knowledge proofs for customer verification to reduce data exposure and enable identity reuse across institutions.
• Coinbase endorses Know-Your-Transaction screening, blockchain analytics clustering, and clear API guidance to enable real-time monitoring and cut false positives.
• The filing requests regulatory sandboxes and closer public–private collaboration, cites alignment with AMLA 2020, and notes Treasury has yet to act as broader crypto oversight debates continue in Congress.