SEC’s Hester Peirce Defends Crypto Privacy, Slams Financial Surveillance
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SEC’s Hester Peirce Defends Crypto Privacy, Slams Financial Surveillance

August 5, 2025

The post SEC’s Hester Peirce Defends Crypto Privacy, Slams Financial Surveillance appeared first on Coinpedia Fintech News

Pro‑crypto SEC Commissioner Hester Peirce, widely known as “Crypto Mom,” has delivered a powerful speech defending the right to financial privacy. Speaking at the Science of Blockchain Conference, she urged regulators to modernize outdated laws, arguing that the current financial surveillance regime is overly intrusive and no longer fits today’s digital economy. 

America’s Financial System is Already a Surveillance State

Peirce criticized the 55-year-old Bank Secrecy Act (BSA), which effectively turned banks into government watchdogs. In 2024 alone, 324,000 financial institutions filed more than 25 million transaction reports, including 4.7 million “Suspicious Activity Reports.”

She noted that the third-party doctrine allows the government to access financial records without a warrant, while the SEC’s Consolidated Audit Trail (CAT) tracks every investor’s trades, even without suspicion of wrongdoing.

Crypto as a Privacy Tool

Peirce likened digital privacy to using cash in earlier times, when people could transact without revealing personal details. She warned that forcing immutable, open-source protocols to comply with financial surveillance laws is “fruitless,” as they are available to everyone forever.

Her remarks come as Roman Storm, co-founder of Tornado Cash, awaits a jury verdict in New York. Prosecutors allege the service helped launder illicit funds, but Storm’s defense argues it’s simply a neutral tool that can be used for good or bad. The Tornado Cash case is seen as a test of how far regulators will go in holding developers accountable for the actions of others.

History Repeats Itself

Peirce recalled how in the 1990s, governments tried to keep strong encryption out of public hands for national security reasons. It took years of legal battles and advocacy by cryptographers like Phil Zimmermann, creator of Pretty Good Privacy (PGP), to win the right for private citizens to use encryption. Today, we rely on it daily for email, online banking, and e-commerce.

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Rejecting Overreach in DeFi Regulation

Peirce criticized the now‑scrapped DeFi broker rule, which would have required decentralized finance platforms to report detailed transaction data to the IRS. She said such rules would “deputize” platforms to spy on users. The measure, introduced under the Biden administration, was formally repealed in April by President Trump.

Industry Reaction

Her speech received strong praise from crypto industry leaders. Peter Van Valkenburgh, executive director at CoinCenter, called it “one of the clearest defenses of financial privacy in the context of crypto yet articulated.” Nate Geraci, president of NovaDius Wealth Management, urged everyone in the crypto community to read her remarks in full.

SEC’s New ‘Project Crypto’ Initiative

In a surprising alignment, SEC Chair Paul Atkins also announced Project Crypto, a push to modernize outdated securities rules and support tokenized assets. The goal is to keep financial innovation in America and adapt regulations for blockchain-based markets.

The SEC will review and possibly repeal rules that no longer fit the crypto era. Meanwhile, the White House is reportedly drafting an executive order to punish banks that block crypto investors and companies, undoing Biden-era restrictions.

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FAQs

What is the Bank Secrecy Act?

The Bank Secrecy Act (BSA) is a 1970 US law that requires financial institutions to assist the government in combating financial crimes by keeping records and filing reports on certain transactions.

What is the Third-Party Doctrine?

The third-party doctrine is a legal concept that states individuals have no reasonable expectation of privacy for information voluntarily shared with a third party, like a bank or phone company. This allows the government to access these records without a warrant.

What is Project Crypto?

Project Crypto is a new SEC initiative, announced by Chairman Paul Atkins, aimed at modernizing outdated securities rules for blockchain-based markets to support tokenized assets and keep financial innovation in America.