SEC's Hester Pierce Champions Financial Privacy in Rousing Speech

In a passionate address at the Science of Blockchain Conference, SEC Commissioner Hester Peirce, widely known as "Crypto Mom," delivered a strong message to regulators: the digital age demands a fundamental rethinking of how the U.S. government surveils financial transactions. Peirce argued that new technologies, like those powered by blockchain, offer a path to protect individual privacy while still fighting crime, and regulators should embrace, not fear, them.

Pierce's speech came at a pivotal time, while the trial of a Tornado Cash developer was ongoing, highlighting the tension between financial surveillance and individual privacy.

Commissioner Peirce’s remarks challenged the long-held "third-party doctrine," a legal principle that says people have no reasonable expectation of privacy for information they voluntarily share with a third party—like a bank. This doctrine, she noted, is the foundation for sweeping surveillance programs like the Bank Secrecy Act (BSA), which requires financial institutions to act as de facto law enforcement by filing millions of suspicious activity reports (SARs) and currency transaction reports (CTRs) each year.

She highlighted the irony that while banks use encryption to protect customer data from theft, that same data is handed over to the government without a warrant.

Peirce dedicated a significant portion of her speech to the role of new technologies in protecting individual privacy, which she framed as a fundamental American right.

Technologies like cryptography, zero-knowledge proofs, and public blockchains can enable individuals to transact and coordinate without the need for centralized intermediaries. Urging regulators to embrace, rather than fear, the potential of disintermediating technologies, Pierce further suggested that the capabilities of these new technologies should serve as a catalyst to rethink and modernize the entire financial surveillance regime.

"Denying people financial privacy—whether through sweeping surveillance programs or restrictions on privacy-protecting technologies—undermines the fabric and freedoms of our families, communities, and nation," Peirce said. "The American people and their government should guard zealously people’s right to live private lives and to use technologies that enable them to do so."

In a probable nod to the legal battle surrounding the Tornado Cash co-founder, Peirce warned against criminalizing developers of open-source privacy software. She argued that holding developers liable for how their code is used by others is a dangerous precedent that could stifle innovation and infringe on fundamental liberties.

This speech solidifies Peirce's reputation as a strong voice for innovation and individual liberty within the SEC, pushing for a future where technology and regulation can coexist without sacrificing fundamental rights.

Alas, the jury for Roman Storm's trial might have been too occupied deliberating their decision to have heard Pierce.