Financial privacy advocacy by SEC commissioner Hester Pierce in a passionate speech
Commissioner Hester Peirce, affectionately known as "Crypto Mom," delivered a stirring address at the Science of Blockchain Conference, where she highlighted the role of new technologies in protecting individual privacy, a fundamental American right.
Peirce, a strong voice for innovation and individual liberty within the Securities and Exchange Commission (SEC), argued against the criminalization of developers of open-source privacy software. She warned that holding developers liable for how their code is used by others could stifle innovation and infringe on fundamental liberties.
The commissioner dedicated a significant portion of her speech to 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. She challenged the "third-party doctrine," a legal principle that people have no reasonable expectation of privacy for information they voluntarily share with a third party.
This principle forms 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.
Peirce suggested that new technologies, like those powered by blockchain, offer a path to protect individual privacy while still fighting crime. Technologies such as cryptography, zero-knowledge proofs, and public blockchains can enable individuals to transact and coordinate without centralized intermediaries.
The commissioner urged regulators to embrace, rather than fear, the potential of disintermediating technologies. She argued that denying people financial privacy undermines the fabric and freedoms of families, communities, and the nation.
Peirce's speech came during the ongoing trial of Roman Storm, the co-founder of the cryptocurrency tumbler Tornado Cash. Storm was found guilty in 2023 of operating an unlicensed money transfer service and conspiracy to launder money, with his trial taking place at the US District Court in the Southern District of New York.
It is unclear whether the jury for Storm's trial had the opportunity to hear Peirce's speech, as they were occupied with their deliberations during her address.
Peirce's impassioned speech solidifies her reputation as a champion for individual liberty and innovation within the SEC. She concluded by emphasizing the importance of the American people and their government guarding zealously people's right to live private lives and to use technologies that enable them to do so. Peirce's speech serves as a catalyst to rethink and modernize the entire financial surveillance regime.
