Commissioner Hester Peirce calls for technology to protect privacy

Hester Peirce, a member of the Securities and Exchange Commission (SEC) who is stepping down in November this year, spoke at SIFMA digital asset in New York on Wednesday, calling for regulators to rethink their approach to financial regulation by promoting less rather than more personal data collection. The remarks came as the SEC was accelerating the development of crypto-regulatory rules, providing new insights into discussions about where industry data compliance should go.

The bigger the haystack, the harder it is to find needles

In his speech, Peirce said that the current society is at a crossroads. One way to do this would be by maintaining the status quo: more data collection, more monitoring of intermediaries, and greater demands for "know your customer" - eventually turning financial infrastructure into a panoramic prison wall.

The other way is to use new technologies to improve the ability to fight crime, while collecting less personal information than before and monitoring in a more restrained manner to protect United States 's privacy.

She argues that it's not possible to find criminals by accumulating data from law-abiding customers. The bigger the haystack, the harder it is to find a needle and thread. And every data point stored increases the risk of leakage or misuse.

zero-knowledge proof With attribute credentials: Smaller data can also be verified

Peirce named several categories of cryptography tools, including zero-knowledge proof and attribute-based credentials. These technologies can verify facts such as whether a person has reached the prescribed age, is an eligible investor or not on a sanctions list without disclosing underlying personal information.

She also urged SEC to allow businesses to directly access the identity checks that other regulated entities have completed, rather than requiring each entity to repeatedly collect and store the same sensitive information.

Attitudes and regulatory environment prior to departure

Peirce earned the nickname "Crypto Eagle" for his relatively friendly regulatory stance towards the crypto industry, and in 2025 was appointed to lead SEC 's Crypto Task Force. Since Trump's re-election as president, there has been a marked shift toward moderation in attitudes toward the cryptocurrency industry; previously under Biden, former chairman Gary Gensler (appointed by Biden) had frequently sued major crypto companies accusing them of selling unregistered securities.

Currently, United States regulators have expressed a desire to establish clear rules for the fast-evolving industry despite landmark legislation such as the Clarity Act being blocked in Congress last week. Pearce's speech before leaving office in November was also seen as a concentrated expression of his regulation ideas.

Subsequent points of interest include: whether SEC will adopt her recommendations on mutual recognition for identity verification, whether privacy technologies such as zero-knowledge proof can be included in the compliance framework, and legislative progress regarding the Clarity Act.

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