In final weeks, SEC's Peirce calls for ending KYC 'panopticon'

Departing SEC Commissioner Hester Peirce called for cryptography to overhaul how the financial system polices crime. She made the case during a Wednesday speech at SIFMA's Digital Assets Conference in New York. Peirce said the KYC and anti-money laundering regime rests on a flawed premise. She said collecting more personal information creates larger data stores that can make criminals harder to identify. Zero-knowledge proofs can verify a fact without exposing the underlying data. Peirce said the technology could let people prove they meet requirements without revealing their names, incomes, or addresses. She called for a regulatory framework that supports attribute-based verification. Peirce said firms could use third-party identity verification instead of copying and storing the same sensitive records across dozens of institutions. The remarks followed a Revolut incident that exposed customers' passports and full Bitcoin transaction histories after the company fulfilled a fraudulent government data request. Trezor suffered breaches at a third-party vendor that exposed tens of thousands of customers. The breaches later fueled phishing attacks. The leaks heightened fears of wrench attacks against crypto holders whose wealth and identities become exposed. Peirce said the speech took place during her penultimate week as a commissioner. She had also pressed the same theme at an August 2025 blockchain conference.