Coinbase has urged the U.S. Treasury Department to overhaul current anti-money laundering regulations, advocating for the integration of technological innovations. In a 30-page submission, Coinbase criticized the Bank Secrecy Act and related rules as outdated and inefficient, suggesting they unnecessarily expose data. The company proposed creating a "safe harbor" for compliance tools utilizing AI and API monitoring, and recommended the use of decentralized IDs and zero-knowledge proofs for customer verification. Additionally, Coinbase emphasized the importance of Know Your Transaction (KYT) on-chain analysis over traditional suspicious activity reporting. The proposal also calls for enhanced public-private collaboration through a regulatory sandbox, aiming to reduce low-value reporting with a results-oriented approach. This initiative comes in contrast to a recent Senate Democratic draft bill that has been criticized for potentially stifling DeFi and wallet development.