Peirce, on her way out of the SEC, calls for scrapping the KYC "panopticon"

Departing SEC Commissioner Hester Peirce used one of her final public appearances to argue that the financial system's approach to policing crime is backwards — and that cryptography, not more data collection, is the fix.

Speaking Wednesday at SIFMA's Digital Assets Conference in New York, Peirce said the know-your-customer and anti-money-laundering regime rests on a flawed premise: that hoovering up information on enough people helps authorities find the criminals hiding among them. "We build ever bigger data haystacks on the theory that we will find a needle or two inside," she said, per Decrypt's account of the speech. "The bigger haystack, however, makes it harder to find the needles."

Her proposed alternative is zero-knowledge proofs and attribute-based credentials — cryptographic methods that let someone prove a fact (age, sanctions status, eligibility) without handing over the underlying data. A proof can tell a counterparty a person qualifies "without that counterparty knowing your name, income, or address," she said, calling for a regulatory framework that encourages such verification. The same class of technology underpins privacy-focused networks like Zcash. The alternative, she warned, is "more data collection, more intermediary surveillance, more 'know your customer' requirements that turn our financial rails into a panopticon." She also floated letting firms rely on shared third-party identity verification rather than each institution independently copying and storing the same sensitive records.

Peirce, the SEC's most consistently crypto-friendly commissioner and a longtime critic of "regulation by enforcement," framed the pitch against recent KYC data breaches. Decrypt cites Revolut exposing customer passports and full Bitcoin transaction histories after fulfilling a fraudulent government data request, and hardware-wallet maker Trezor's third-party vendor breaches, which exposed tens of thousands of customers and fueled later phishing. Such leaks feed fears of "wrench attacks," where criminals physically target crypto holders whose wealth and identity have been exposed.

Key facts

• Peirce made the remarks Wednesday, Sept. 23, at SIFMA's Digital Assets Conference in New York (Decrypt).
• She disclosed the speech came during her "penultimate week" as commissioner (Decrypt).
• She proposed zero-knowledge proofs and attribute-based credentials as replacements for bulk KYC collection (Decrypt).
• Cited breaches: Revolut (passports, BTC histories, via a fraudulent data request) and Trezor (vendor breaches, tens of thousands of customers) (Decrypt).
• Peirce has pressed the theme before, including at an August 2025 blockchain conference (Decrypt).

The real-world read

This is a speech, not a rule. Peirce is a commissioner in her final weeks, and — as the SEC's lone reliably pro-crypto voice — her positions have rarely translated into agency policy. A departing official's parting pitch carries no binding weight; whatever the SEC does next on identity and surveillance will be decided by the commissioners who remain. Note also that the reporting here is single-sourced: the account of the speech, the quotes, and the breach details all come from Decrypt's write-up, and the full text of Peirce's remarks wasn't independently available. Read it as one commissioner's exit argument, not a shift in where the agency is headed.

Opinion, and whose

The claim that KYC "data haystacks" endanger the people they protect, and that zero-knowledge proofs offer a better path, is Peirce's own argument. The characterization of "data maximalists" and the "panopticon" framing are hers.

Sources

• Decrypt (secondary reporting) — sole source for the speech, quotes, timing, and the Revolut/Trezor breach details. No primary transcript of Peirce's remarks was cited.

Not financial advice.