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US Crypto Regulations Under Scrutiny: Banks Call for Stricter AML Policies

A recent report by the Bank Policy Institute (BPI) has reignited discussions surrounding anti-money laundering (AML) regulations in the crypto sector.

The BPI claims that cryptocurrencies and stablecoins are increasingly utilized for illicit activities, including money laundering and terrorist financing.

They argue that crypto businesses currently lack equivalent legal obligations to maintain the integrity of financial systems compared to traditional banks.

The report highlights a 162% year-over-year increase in illicit crypto transactions, with $154 billion funneled through crypto addresses in 2025.

BPI's findings also suggest a disturbing rise in human trafficking funded by cryptocurrencies, with transaction volumes soaring by 85%.

In response, crypto leaders like Coinbase's Chief Policy Officer, Faryad Shirzad, contest the BPI's framing of the narrative as overly simplistic and selectively focused.

He argues that while illicit activities do occur in the crypto space, they represent a small fraction—under 1%—of total transactions according to Chainalysis.

Shirzad asserts that a fair comparison should also include the traditional financial system, where estimates suggest that between 2-5% of global GDP is laundered.

He acknowledges the necessity of regulatory scrutiny in the crypto arena while advocating for a balanced approach to AML efforts across all financial sectors.

As the debate escalates, the future of crypto regulation in the U.S. remains at a critical crossroads, balancing national security with innovation.