SEC's Peirce Urges Privacy-First Tech Over Data Hoarding

Outgoing SEC Commissioner Hester Peirce has argued that financial regulators should shift their approach, pushing for reduced collection of personal data rather than expanded surveillance.

During a Wednesday address focused on digital identity and decentralized systems, Peirce criticized existing know-your-customer and anti-money-laundering requirements.

As U.S. regulators accelerate crypto rulemaking, Peirce—nicknamed “crypto mom” for her pro-innovation stance—will depart the SEC in November.

“Today society is at a crossroads,” Peirce said at the SIFMA’s Digital Assets Conference in New York.

“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.”

“Down the other path lies an opportunity to use new technologies to improve our ability to catch criminals while collecting less personal information than ever before, and monitoring more sparingly to protect Americans’ privacy.”

Peirce contended that amassing ever more data on law-abiding customers to catch wrongdoers is ineffective. Larger “haystacks” only make finding the needles harder, she argued, while each stored data point increases the potential for leaks or misuse.

She also took issue with a regulatory mindset obsessed with “data go up,” likening it to crypto enthusiasts’ fixation on rising prices.

Peirce highlighted cryptographic tools like zero-knowledge proofs and attribute-based credentials, which can verify a person’s age, accredited-investor status, or absence from sanctions lists without exposing the underlying personal details.

She further recommended that the SEC permit firms to rely on identity checks already conducted by other regulated institutions, rather than compelling each firm to gather and store the same sensitive information.

Under President Joe Biden, the SEC took a hard line on crypto, with Biden-appointed former Chair Gary Gensler frequently suing major crypto companies over alleged sales of unregistered securities.

Peirce was named to lead the Crypto Task Force in 2025. The regulator has adopted a far more welcoming stance toward the industry since Donald Trump returned to the presidency.

Now regulators say they aim to establish clear rules for the fast-moving sector, even as the landmark Clarity Act was blocked last week.

Despite her “crypto mom” alias, Peirce has previously said she would not call herself an industry advocate, but rather a “freedom maximalist.”