In remarks at a Securities Industry and Financial Markets Association event, a departing U.S. Securities and Exchange Commission commissioner called for federal regulators and financial institutions to replace prescriptive data collection with attribute based verification wherever technologically feasible. Building on earlier advocacy for privacy enhancing compliance tools, the commissioner argued that digital credentials and zero knowledge proofs could verify facts such as age, citizenship, accredited investor status or sanctions screening without disclosing underlying personal information. The commissioner urged regulators to reassess what customer data firms must collect, whether reporting thresholds are too low and whether multiple institutions need to retain the same information. Specific proposals included making third party identity verification the norm for Customer Identification Program compliance and adapting oversight to permissionless networks, whose public ledgers can support transaction analysis without requiring a custodial intermediary solely to collect data. The remarks also reviewed the SEC’s previously announced, time and size limited Innovation Exemption for trading tokenized securities through automated market makers, describing it as a bridge to permanent rules rather than a substitute for rulemaking.
2026-09-23U.S. Securities & Exchange Commission
U.S. Securities and Exchange Commission commissioner calls for privacy preserving overhaul of KYC and financial surveillance
A departing U.S. Securities and Exchange Commission commissioner urged regulators to shift Know Your Customer compliance from broad personal data collection toward attribute based verification and zero knowledge proofs. The commissioner also advocated wider reliance on third party identity checks and regulatory approaches suited to permissionless networks, while reiterating that the SEC’s Innovation Exemption for tokenized securities is a temporary bridge to permanent rules.