Coinbase to US Regulators: Blockchain Isn’t The Enemy — It’s The Ultimate Financial Solution
Wall Street's worst nightmare just became its only salvation.
The Regulatory Rebellion
Coinbase executives dropped the mic in Washington today, telling bureaucrats they're fighting the wrong battle. While traditional finance keeps tripping over its own regulations, blockchain technology quietly built the escape hatch.
Bypassing the Middlemen
Think about it—no more waiting three business days for settlements. No more paying banks to hold your own money. The technology that powers crypto isn't just about digital coins—it's about rebuilding the entire financial infrastructure from the ground up.
The Irony of Innovation
Here's the delicious part: the same institutions that dismissed crypto are now scrambling to understand the very technology that might make them obsolete. It's like watching taxi companies finally realizing Uber exists—after the entire city already switched.
Wall Street's still counting its fees while blockchain counts milliseconds. Some things never change—except everything that matters.
Coinbase Pushes Tech-Friendly Rules
In the submission, which runs about 30 pages, Coinbase’s Chief Legal Officer Paul Grewal proposed several practical steps. Reports have disclosed requests for safe-harbor testing zones where firms could try new monitoring tools without immediate enforcement risk.
When bad guys innovate in financial crime, good guys need innovation to keep pace. @coinbase filed a response to @USTreasury‘s Request for Comment on “Innovative Methods to Detect Illicit Activity Involving Digital Assets” to underscore this reality and 4 particular reforms UST…
— paulgrewal.eth (@iampaulgrewal) October 20, 2025
The company asked Treasury to recognize decentralized IDs and zero-knowledge proofs as valid ways to verify customers, and to support standardized APIs so exchanges and regulators can share the right data.
Grewal wrote, “When bad guys innovate in financial crime, good guys need innovation to keep pace.” That line was used to underline the company’s point that traditional, form-driven reporting can miss real threats.
At @coinbase, we’re constantly modernizing our defense systems to protect our customers and national security. The government’s approach to combating financial crime should be no different. That’s why policymakers should embrace innovation to modernize AML with proven digital… https://t.co/82GfJSzRDs
— Faryar Shirzad
(@faryarshirzad) October 20, 2025
Why Coinbase Says Change Is Needed
According to Coinbase, current rules under the Bank Secrecy Act generate vast amounts of suspicious activity alerts, many of them low value, and leave both firms and regulators overwhelmed.
The firm argued a results-based approach WOULD focus on outcomes — like whether illicit activity was actually detected and stopped — instead of forcing specific, often outdated methods on every actor.
Reports show Coinbase also framed this as a national competitiveness issue, pointing to a WHITE paper from its policy arm titled “The National Security Case for Crypto and Blockchain.”
At the same time, privacy advocates and some civil liberties groups have raised red flags. Blockchain tracing can expose transaction links that were previously harder to discover, and activists worry about overreach.
Coinbase told Treasury it wants fewer blanket data grabs and more targeted, meaningful reporting — a MOVE it says would protect privacy while improving enforcement.
Featured image from Gemini, chart from TradingView
