U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said financial privacy is increasingly undervalued in U.S. regulations, warning against treating privacy-preserving technologies with suspicion.
At Georgetown Law on Wednesday, Peirce described privacy-enhancing technologies, including cryptographic tools, as legitimate elements of state-of-the-art financial infrastructure, rather than tools primarily associated with criminal activity.
Peirce said protecting financial privacy is not inconsistent with national security goals.
“Empowering the government to be able to identify, prosecute and punish criminals is important for the security of the nation and its citizens, but it is equally important to empower people to protect the information about their lives, including their financial lives,” she said, according to the report transcription published on the SEC website.
She added that privacy technologies can support individuals protect themselves from hackers, fraudsters and other malicious actors and should not be seen as “an opportunity for the government to keep a closer watch on what its citizens are doing.”
Peirce also encouraged developers creating privacy-enhancing technologies to engage with the SEC’s Cryptocurrency Task Force, particularly on tools that could support meet Know Your Customer (KYC) and anti-money laundering (AML) compliance requirements.
Source: zoo
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Privacy is back in the spotlight of cryptocurrencies
Privacy and privacy-preserving technologies have long been one of the main utilize cases for cryptocurrencies, with projects such as Monero and Zcash relying on protecting transaction data and user identities.
The debate returned to the spotlight last year as regulators and developers clashed over the role of privacy tools in crypto. While supporters say the technologies protect users from surveillance, hackers and data exploitation, critics have raised concerns about their potential utilize in illicit finance.
The debate has also been taken up in the European Union, where regulators and blockchain industry participants are considering modern AML rules that are expected to come into effect in 2027. Under the framework, credit institutions and crypto asset service providers would be prohibited from maintaining anonymous accounts or supporting privacy-preserving cryptocurrencies.
Maintaining access to privacy-focused digital assets has been a “constant battle” between the cryptocurrency industry and regulators, According to Anja Blaj, legal consultant at the European Crypto Initiative.
Growing interest in privacy cryptocurrencies has helped Zcash prices skyrocket over the past year. Source: CoinMarketCap
At the same time, companies continue to develop privacy-oriented blockchain applications. Aptos has unveiled a privacy-focused coin designed to support companies transact online without revealing treasury movements, payment flows or trading strategies to competitors.
Polygon has also made private stablecoin payments available to institutions, positioning the feature as a way to support broader adoption of onchain transactions.
Related: Bitcoin developer launches privacy-focused Nostr VPN using public keys
