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SEC’s Hester Peirce Says Crypto Privacy Can Coexist With KYC

Key Highlights

  • SEC Commissioner Hester M. Peirce supports privacy tools in crypto and says they are important for user safety in the digital financial system.
  • She warns that too much focus on government surveillance can reduce privacy for everyday users, even though fighting crime is still important.
  • She argues that privacy and regulation can work together, using crypto tools like wallet addresses and blockchain records to protect users’ identities.

SEC Commissioner Hester Peirce believes that privacy should be a key consideration when regulating cryptocurrencies, and she supports stronger privacy safeguards within crypto systems.

At a recent event hosted by Georgetown Law’s Institute of International Economic Law, Commissioner Peirce explained how technologies that protect user privacy can still work alongside financial regulations like Know Your Customer (KYC) and anti-money laundering (AML) rules.

She started her speech by making it clear that she was sharing her own opinions as a commissioner, and not the official stance of the Securities and Exchange Commission.

Privacy as basic need in digital finance

Peirce began her speech by playfully acknowledging the event’s theme, then encouraged the audience to use their strength and intelligence to create effective privacy technology, saying, “You’ve got the brawn; You’ve got the brains; Go make good privacy tech.”

According to Peirce, privacy isn’t a luxury – it’s essential for security in our digital lives. She argues that when people use services like banking, they shouldn’t have to worry about their personal information being vulnerable or exposed.

She believes regulators should prioritize the public’s interests, including the security of people’s financial information. She’s noticed that current policy debates often concentrate on government oversight of financial companies, but not enough on safeguarding the privacy of regular users. This lack of focus, she argues, can lead to financial products and services being designed in ways that compromise people’s privacy.

Security goals must not harm ordinary users

She agreed that governments need to be able to catch and punish criminals, particularly those committing fraud, theft, or endangering national security. However, she emphasized that this shouldn’t come at the expense of the financial privacy of law-abiding citizens.

In my research, I’ve found that privacy tools can surprisingly *improve* security. It all comes down to minimizing the data collected and stored in any single location. When we centralize too much personal information, we create a much more attractive and vulnerable target for hackers and criminals. The less data available in one place, the better protected everyone is.

Peirce wants privacy and regulation to work together

Cryptocurrency systems use wallet addresses that aren’t connected to people’s actual identities. While all transactions are publicly viewable on the blockchain, it’s difficult to figure out who owns a specific address. This design, she explained, shows how openness and privacy can work together.

As an analyst, I’ve been following the discussion around current financial regulations, and a key point raised was the extensive personal information intermediaries – like transfer agents – are required to gather from investors. The argument is that instead of collecting all this private data, we could leverage blockchain technology to verify ownership, offering a more secure and privacy-focused approach.

This approach would clarify ownership without requiring everyone to exchange private information. She believes this could help prevent identity theft and protect people’s data from being misused.

Calling for an alliance between the industry and regulators

She concluded by urging closer collaboration between those who build crypto technology and the government agencies that oversee it, particularly through the Crypto Task Force. This group, started in January 2025 with Acting Chairman Mark T. Uyeda leading the effort, aims to find ways to comply with customer verification (KYC) and anti-money laundering (AML) regulations while also safeguarding user privacy.

She argued that law enforcement should prioritize catching actual criminals instead of monitoring the financial activity of ordinary people.

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2026-05-28 19:48