The SEC’s sixth Crypto Task Force roundtable addressed issues of privacy in digital assets and how the agency should weigh market and investor protection against individual liberties. The discussion featured participants in the blockchain technology space as well as voices representing policy, legal, and civil liberties organizations.
The commissioners who spoke painted a picture of a previous SEC that was overly skeptical of the anonymous and untraceable nature of crypto. A key theme of Commissioner Mark Uyeda and Chairman Paul Atkins‘s introductory speeches was the speed of technological development and its tendency to erode privacy rights if regulatory frameworks cannot keep pace or default to broad surveillance.
Uyeda specifically flagged the Bank Secrecy Act as a statute that may need to be revisited as new tech reduces reliance on intermediaries, while Atkins noted that at the SEC, “voracious” and expensive data-collection regimes such as the Consolidated Audit Trail (CAT) contributed to the agency’s steady drift towards “mass surveillance.”
Commissioner Hester Peirce, noting that the event fell on the anniversary of the signing of the Bill of Rights, noted that government intrusion into personal finances can reveal more about a person’s inner life than a sweep through his or her house, although people are less concerned about the former. She noted that legal developments such as the third-party doctrine, and a longstanding “anti-financial privacy ethos” contributed to the undermining of protections.
Peirce and Atkins also emphasized that privacy is a functional market requirement, with Atkins stressing that trading firms are unlikely to deploy certain strategies or provide liquidity if every move is instantly visible and exploitable.
Industry participants and commentators speak
Echoing commissioners’ comments, industry participants stressed that regulators should not assume, prima facie, that the use of privacy tools necessarily implies wrongdoing, and that users should not bear the burden of affirmatively proving compliance, absent evidence of misconduct.
One participant noted that current compliance technology is quickly becoming outmoded in an AI era and argued for systems that do not over-collect data with little value, noting that static ID verification techniques like driver’s license uploads could be easily forged.
Some providers of privacy technology services noted that “selective disclosure” and “zero-knowledge” privacy proofs could verify and screen transactions and identities without exposing personal data, protocols Commissioner Uyeda also endorsed in his remarks.
In a written submission, panelist JW Verret, a law professor at George Mason University, stated that the SEC needed clearer boundaries for when financial surveillance should be treated as legitimate and when it crosses into unjustified surveillance.
He also warned that regulators should not impose bank-style surveillance and AML obligations onto blockchain-based software systems through guidance documents or enforcement actions without explicit Congressional approval, as this would essentially be treating them as regulated intermediaries despite not forming a customer relationship.
