Hester Peirce used her final platform as a Securities and Exchange Commission (SEC) commissioner to deliver a sharp proposal on privacy. Speaking at SIFMA’s 2026 Digital Assets Conference in New York on September 23, 2026, she called on the financial industry to stop collecting excessive customer data merely to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
According to Peirce, existing KYC and AML requirements force financial institutions to continually hoard customer identity data and transaction histories. This repetitive practice creates massive data stockpiles that heighten privacy risks. Furthermore, she argued that today’s financial surveillance infrastructure increasingly resembles a “panopticon” - a system where everyone’s movements are constantly monitored. She questioned why every entity across the industry must collect identical sets of personal data for the same customer.
Proving Eligibility Without Surrendering Identity
As a solution, Peirce proposed transitioning toward attribute-based credentials. Under her framework, an investor would only need to prove that they satisfy specific regulatory criteria. They would merely confirm their minimum age threshold, citizenship, accredited investor status, or pass sanctions screening lists. All of these validations could be performed without requiring customers to hand over their real names, home addresses, or actual income figures to trading platforms.
Zero-knowledge proof technology serves as the technical backbone enabling this approach. This cryptographic method allows one party to prove the truth of a statement to another without revealing any underlying personal data. Across the Web3 ecosystem, zero-knowledge proofs are widely utilized as core technology for privacy-focused blockchain networks and decentralized finance (DeFi) protocols.
Existing Rule Provisions and Third-Party Solutions
Peirce highlighted that legal frameworks for market participants already offer room to streamline verification. Existing US broker-dealer regulations permit firms to rely on identity checks conducted by other financial institutions, albeit under strict conditions. She advocated for frameworks that delegate verification to trusted third parties, ensuring sensitive public data is not scattered across dozens of different broker servers.
It should be noted that these views remain purely Peirce’s personal policy proposals and do not reflect official changes to US KYC or AML laws. While the commissioner’s term is coming to an end, her proposals spark discussion on how centralized privacy risks could be mitigated using native crypto tools. Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
