U.S. Securities & Exchange Commission Commissioner Peirce urges a rethink of financial surveillance and cautions against Bank Secrecy Act-style duties for non-custodial crypto developers

The U.S. Securities & Exchange Commission published remarks by Commissioner Hester M. Peirce at the Crypto Task Force’s sixth roundtable on privacy and financial surveillance, arguing that financial transactions are subject to routine mass surveillance despite revealing as much or more about individuals than activity in the home. She framed crypto as accelerating a reassessment by enabling more disintermediated transactions while also increasing demand for privacy-protecting tools on public blockchains. Peirce highlighted that tokenized securities transactions can occur without a broker and that many crypto transactions are visible on public blockchains, spurring development of tools such as zero-knowledge proofs and mixers to protect lawful users while supporting compliance. She pointed to the GENIUS Act’s directive for the U.S. Department of the Treasury to identify innovative methods regulated financial institutions can use to detect digital-asset-related illicit activity, noting that process is underway, and set out policy themes including not treating privacy protection as evidence of wrongdoing, resisting regulatory approaches that force intermediation to facilitate surveillance, and avoiding imposing regulatory obligations, including Bank Secrecy Act obligations, on software developers that do not have custody of user assets or the ability to override user choices.