When the spender isn't a person

 by Monty Donohew

In February, Coinbase Developer Platform released Agentic Wallets, infrastructure built specifically so that AI agents can hold funds, spend them, trade them, and earn yield on their own, without a human clicking “approve” on each transaction.

 

The system runs on x402, a payments protocol Coinbase introduced in 2025 that lets software send and receive money directly, modeled on an old and mostly unused piece of the internet’s plumbing: the HTTP “402 Payment Required” status code, sitting dormant in web standards for decades until someone finally built the machinery to use it.

 

An agent wallet comes with programmable spending caps and an audit trail, installable in minutes through a command-line tool. There’s no login, no recovery phrase taped to a monitor. There is a piece of software with a bank balance and permission to spend it.

By June, according to blockchain analytics firm Chainalysis, agentic payments running through this system on Coinbase’s Base network had crossed 100 million transactions in roughly nine months. Most of it is small: nearly all of that transaction volume consists of payments under a few dollars, machines buying data, compute, or access to other machines’ services, one micropayment at a time. Chainalysis also found, though, that transfers of $1 or more had come to account for 95 percent of the value moved.  The x402 protocol itself now sits under Linux Foundation governance, with Coinbase, Cloudflare, and Stripe among its backers.  

This is no fringe experiment. It’s becoming plumbing.

CEO Brian Armstrong has been quite candid about the reasoning behind it. His argument, made repeatedly and in public, is that banks cannot serve AI agents because traditional finance requires identity verification, and a piece of software cannot produce a government ID or a Social Security number.

Crypto wallets, by contrast, can be created and funded by code in seconds, with no identity check required.

Armstrong’s conclusion follows in a straight line: banks are structurally excluded from this market, so crypto becomes the default rail for an entire category of financial actor that didn’t exist five years ago. He has said directly that he expects the agentic economy to “eventually transact far more per day than all humans combined.”

It is worth stating what that argument actually is, apart from its technical merits: it is a description of regulatory arbitrage as a matter of technical necessity.

Banks exclude agents because agents cannot satisfy identity rules Congress wrote for humans.

Crypto doesn’t ask. Framed that way, calling crypto “the default rail” mostly describes where regulation hasn’t caught up yet.

Set aside for a moment whether Armstrong’s larger prediction is right. Assume it’s even half right.

What does it mean for a financial system built, from the ground up, around the assumption that money moves at the direction of a legal person?  

Suppose an agent front-runs a market, drains a counterparty through a manipulated smart contract, or launders proceeds through a chain of other agents faster than any compliance officer can flag the pattern.

Who answers for it? The model vendor, perhaps, if the conduct can be traced to a design choice rather than to behavior nobody anticipated.

Maybe the person who wrote the prompt and set the spending limits, if they can be found and if a court decides that setting a limit is the same thing as authorizing everything within it.

Or Coinbase, since it holds the keys and built the rails the agent moved on.

The protocol itself, which answers to a foundation, not to a chartered bank or a licensed money transmitter.

Or no one at all, because the entire point of the system was to let the payment clear without a human in the loop to hold responsible.

Every one of those answers is plausible. None of them has been tested in a courtroom, because the case that would test it hasn’t happened yet.

Speed is the product. Review is the casualty.

Congress has not resolved this, because Congress has barely begun to ask the question. The Digital Asset Market Clarity Act, still moving through the legislative process, was drafted for a world where the customer buying and selling crypto is a person or a firm. Armstrong himself said publicly, when the bill was headed to markup, that Coinbase couldn’t support it as written, and that was before agentic wallets existed as a live product moving real transaction volume.

Be clear that this is not a call to halt the technology. Machine-to-machine payments solve a real problem, and the market clearly wants them badly enough to have pushed volume past a hundred million transactions in under a year. It is a call to notice that the infrastructure has outrun the legal categories meant to govern it, and that this gap will not close itself.  

Regulators tend to write rules in response to a crisis that has already happened. The honest question raised by Agentic Wallets is whether anyone is willing to write the rules before the crisis, for once, rather than after it,  while accountability can still be designed into the system rather than reconstructed from the wreckage of a case nobody saw coming.

https://www.americanthinker.com/blog/2026/08/when-the-spender-isn-t-a-person/