SEC Commissioner Hester Peirce is advocating for the right of Americans to use privacy-focused crypto technologies without government surveillance. Her remarks, delivered at Stanford’s Science of Blockchain Conference, were made as the criminal trial for Tornado Cash co-founder Roman Storm gets underway.
Peirce criticized the decades-old Bank Secrecy Act, which requires financial institutions to act as investigators by filing millions of transaction reports annually. She argued that this framework erodes Fourth Amendment protections by requiring individuals to give up their privacy when using financial intermediaries.
The Commissioner supports technologies like zero-knowledge proofs and decentralized networks, which eliminate the need for intermediaries. She also warned against making open-source software developers liable for how others use their code, arguing that it is not practical to apply surveillance measures to immutable, publicly available protocols.
Peirce’s comments coincide with the trial of Roman Storm, who is accused of facilitating over $1 billion in illicit transactions through the crypto mixer Tornado Cash. The prosecution has faced challenges with its evidence, including a key Telegram message that was initially misattributed to Storm’s co-developer, Alexey Pertsev. The defense revealed the message was actually written by a former reporter.
Peirce questioned whether the Bank Secrecy Act’s “sledgehammer approach” provides enough benefit to justify its significant costs to financial institutions and the privacy of Americans. She noted that a recent Government Accountability Office report found that most of the required transaction reports are not even used by law enforcement.
The Commissioner also criticized the SEC’s own Consolidated Audit Trail (CAT), which collects extensive trading data on all customers without suspicion of wrongdoing. She and another commissioner have described the CAT as a tool of a “dystopian surveillance state” that disregards investor privacy. Following privacy concerns, the SEC recently stopped requiring customer names, addresses, and birth years in CAT submissions.
