Coinbase Challenges US Treasury on Outdated AML Rules

Coinbase has urged the U.S. Treasury to recognize dated AML rules as inadequate and suggests tech-based updates, including AI compliance tools.

The plea highlights urgency for modernizing financial safeguards using blockchain, aiming to improve transparency and enforcement.

Coinbase Advocates for AI in AML Overhaul

Coinbase has formally urged the U.S. Treasury to consider that the current anti-money laundering regulations are “broken” when applied to cryptocurrencies. They advocate for updates using AI compliance tools and leverage blockchain transparency.

Leaders from Coinbase’s legal and compliance teams are heavily involved, attempting to drive significant changes in the regulatory environment. This initiative seeks to exclude unrealized crypto gains and losses from some taxation classifications. As Brian Armstrong, CEO of Coinbase, emphasized, “Coinbase and Strategy Incorporated urge Treasury to exclude unrealized crypto gains and losses from CAMT, citing constitutional concerns, global accounting disparities, and risk to digital asset innovation” (Coinbase Public Policy).

Potential Ripple Effects on Major Cryptocurrencies

The advocacy by Coinbase is expected to impact AML obligations for all digital assets supported by its platform, potentially easing compliance burdens while increasing enforcement capabilities. These changes could influence major assets such as BTC and ETH.

Coinbase’s push for technology-based solutions highlights risks in the existing regulatory framework, suggesting potential broader changes in financial crime enforcement. The SEC’s ongoing actions reflect the industry-wide momentum towards regulatory updates. However, there are no immediate changes in the way AML rules are currently applied.

Crypto Industry Wants Outdated Regulations Revamped

Similar calls for reform have accompanied recent actions by the SEC and others, where adaptations were sought in response to a changing crypto landscape. Coinbase’s action underscores a continual push for modernization.

Potential outcomes could see a shift in how digital assets are regulated, reflecting trends toward increased transparency and efficiency. Such historical trends suggest technology will likely play a vital role in future compliance strategies.