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SEC’s Peirce Backs Privacy Tools as Surveillance Push Grows
Hester Peirce argues zero-knowledge proofs strengthen investor protection, pushing back against multi-agency surveillance. Next catalyst: SEC rulemaking agenda.
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U.S. Securities and Exchange Commissioner Hester Peirce, who leads the agency’s Crypto Task Force, made a direct case for privacy-enhancing technologies in a public statement reported this week. She argued that tools such as zero-knowledge proofs and privacy wallets can strengthen investor protection. Regulators should not treat them with suspicion, she said.
The comment lands when multiple jurisdictions are tightening rules around anonymous transactions. The European Union’s MiCA framework imposes travel-rule compliance on unhosted wallets. France’s AMF set a June 30 deadline that could force 70% of local crypto firms to exit unless they meet rigorous standards. Peirce’s stance signals that the SEC remains divided internally. Enforcement actions like the Tornado Cash sanctions point one direction. Her task force suggests a more permissive path for privacy coins and mixers.
Peirce’s Argument Against the Surveillance Trend
Peirce’s core logic flips the usual assumption that privacy equals risk. Privacy tools reduce the risk of hacks and front-running, she said, by hiding transaction data from bad actors. A public blockchain that exposes every wallet balance and order flow invites manipulation. Zcash (ZEC) and Monero (XMR) rely on exactly this mechanism. Their market existence depends on regulatory tolerance.
The naive interpretation is that Peirce offers rhetorical cover for a corner of crypto that has mostly stayed silent since the Treasury Department sanctioned Tornado Cash in 2022. The better market read involves execution risk. Even if the SEC’s task force takes a gentler line, other agencies can act independently. FinCEN and OFAC do not answer to the SEC. Privacy tokens face exposure to a multi-front surveillance campaign.