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BTC 
ZEC Former SEC Commissioner Hurst Pierce calls for the use of cryptography to reshape the financial crime governance system
Outgoing Securities and Exchange Commission Commissioner Hester Peirce has put forward a proposition that cryptography should be used to revolutionize the way crimes are regulated in the financial system. She pointed out that regulators 'excessive thirst for personal data has built a huge and vulnerable treasure trove of data that not only fails to effectively protect target groups, but also puts them at risk.
At the SIFMA Digital Assets Conference in New York, Pierce said that the Know Your Customer (KYC) and anti-money laundering system are based on a flawed premise: the belief that collecting information from enough people will help authorities identify criminals from law-abiding citizens. "We keep building larger data 'haystacks' hoping to find a needle or two," she said."However, the bigger the haystack, the more difficult it is to find the needle."
She believes that existing technology provides a better solution path. Zero-knowledge proof is a cryptographic method that verifies the authenticity of facts without exposing the underlying data. This means that individuals can prove they meet a requirement without having to provide sensitive details. This technology is also the basis for private cryptocurrency networks and assets such as Zcash.
"Zero-knowledge proof can show a counterparty that someone qualifies without letting that counterparty know your name, income or address," Pierce said, calling for a regulatory framework that encourages such attribute-based verification. The regulator, affectionately known as the "Crypto Mom," warned that the alternative would be "more data collection, more intermediary monitoring, more 'know your customer' requirements, which would turn our financial infrastructure into a panoramic open-view prison."
These remarks come against a grim backdrop: KYC data has become a risk in itself. Financial technology platform Revolut recently leaked customers 'passport information and complete Bitcoin transaction history in response to a fraudulent government data request; while hardware wallet maker Trezor was compromised by a third-party vendor, causing tens of thousands of customers' information to be leaked and subsequently triggered a phishing attack.
Such data breaches have heightened fears of "physical coercion attacks," in which criminals make direct threats against cryptocurrency holders whose wealth and identity are exposed.
As one of the most pro-cryptocurrency voices within the SEC, Pierce has long criticized the agency's past "regulation through enforcement." She warns against becoming so-called "data maximizers," a group that assumes that collecting more data is always better. She recommended that regulators allow companies to rely on third-party authentication services, rather than having each agency independently replicate and store the same sensitive records,"scattered among dozens of agencies."
This is a theme that Pierce has emphasized many times before, including at a blockchain conference in August 2025. This view has even more weight now: she revealed that the speech was given within the last two weeks of her tenure as a committee member.
