Coinbase Urges Lawmakers to Adopt Zero-Knowledge Proofs

• Lyla Velez
• August 5, 2025
• Policy
• 0 Comments

Paul Grewal‘s advocacy for Zero-Knowledge Proofs underscores a potential shift in financial compliance practices, with implications for privacy and security in digital asset exchanges.

Coinbase is positioning itself at the forefront of a regulatory modernization movement. Paul Grewal aims to replace traditional data sharing compliance methods with Zero-Knowledge Proofs to combat privacy challenges. This proposal suggests potentially significant changes for users and law enforcement interactions.

“In financial cases, you could open a new account with a company like Coinbase without sharing decades of personal data, instead using ZKPs to prove you are not on any sanctions lists, you’re not a minor, etc. And if law enforcement wanted detailed information on the customer, they would be able to subpoena the company that issued the ZKP.”

Grewal’s appeal lacks specific financial backing or commitments. However, the emphasis on regulatory modernization alongside privacy is central. Promising to address privacy concerns, the proposal seeks to integrate Zero-Knowledge Proofs into US laws.

The initiative may impact blockchain projects such as Lagrange and Ethereum-based ZKP protocols, considering regulatory integration opportunities. This shift could increase market participation and interest.

Although there’s no immediate financial or governmental backlash, ongoing development of Zero-Knowledge Proof standards may influence adoption. Grewal’s move coincides with NIST’s standardization efforts, signaling potential industry-government alignment.

Coinbase’s call might expedite the industry’s regulatory evolution, potentially fostering innovation in blockchain applications. Historical precedents hint at market receptivity, but specific outcomes remain contingent upon legislative actions and industry acceptance.