Securities and Exchange Commission Commissioner Hester Peirce has advocated for a fundamental shift in how U.S. regulators monitor the financial system, pressing for less personal data collection rather than more.
Speaking Wednesday at the SIFMA's Digital Assets Conference in New York, Peirce addressed digital identity systems and decentralized networks, taking aim at know-your-customer and anti-money-laundering rules that she said create excessive surveillance infrastructure.
"Today society is at a crossroads," Peirce said. "Down one path lies the status quo: more data collection, more intermediary surveillance, more 'know your customer' requirements that turn our financial rails into a panopticon."
Peirce argued that accumulating vast amounts of personal information on law-abiding customers is counterproductive. She contended that larger datasets make it harder to identify actual threats, while every stored data point increases the risk of breaches or misuse.
Privacy-Preserving Technologies
Peirce pointed to cryptographic tools such as zero-knowledge proofs and attribute-based credentials as alternatives. These technologies can verify facts—such as a person's age, accredited-investor status, or absence from sanctions lists—without revealing underlying personal details.
She also urged the SEC to permit firms to rely on identity verification already completed by other regulated institutions, rather than requiring every firm to collect and store the same sensitive information independently.
Regulatory Transition
Peirce, who earned the nickname "crypto mom" for her approach to cryptocurrency regulation, is set to leave the SEC in November. She was appointed to lead the Crypto Task Force in 2025 under President Donald Trump, whose administration has taken a friendlier stance toward the crypto industry compared to the previous administration.
The regulatory environment has shifted significantly following changes in presidential administration, with the SEC now working toward creating clearer rules for the cryptocurrency sector.
