Key Takeaways
SEC’s Hester Peirce has criticized centralized third parties and regulatory frameworks, including the Bank Secrecy Act, for the unintended impact of ‘unwarranted financial surveillance.’
U.S SEC Commissioner Hester Peirce has thrown her support behind financial privacy tech leveraging blockchain and crypto protocols. In a statement on 4 August, Peirce acknowledged that centralized regulators like the SEC fear losing control of user data to track the bad actors.
However, she urged regulators to embrace privacy tools to allow legitimate citizens to live without ‘unwarranted financial surveillance.’
“Rather than something to be feared, we should embrace these tools’ ability to help humanity live freer lives without unwarranted financial surveillance.”
She added,
“People use these tools for bad purposes, too, but treating technology as the villain will impinge on legitimate users’ privacy.”
Call for review of the Bank Secrecy Act
Peirce mentioned the Bank Secrecy Act (BSA), which seeks to curb money laundering, as one of the drivers of surveillance. Beyond privacy, the high cost of compliance and reporting of users’ financial transactions calls for a timely review of the BSA, she added.
“Questions about the cost, usefulness, and privacy implications of the BSA make reforming the BSA a timely topic.”
The commissioner concluded that there should be concerted efforts to ensure the ability to communicate and share value privately.
“We should take concrete steps to protect people’s ability not only to communicate privately, but to transfer value privately, as they could have done with physical coins in the days in which the Fourth Amendment was crafted.”
As expected, several crypto leaders and advocacy groups seem to be in support of her position.
In fact, Coinbase’s Legal Chief Paul Grewal took issue with the KyC (know your customer) requirement under the BSA. He stated,
“Governments are unnecessarily forcing companies to collect and transfer vast sums of sensitive customer data, and the customers hate it.”
Coinbase’s CEO also agreed with Grewal, adding that BSA is designed for the paper-based era, not the current digital world.
For his part, Peter Van Valkenburgh, Executive Director at advocacy group Coin Center, added that most of the federal laws are being abused at the expense of legitimate users.
Is privacy a crime?
The debate follows the ongoing prosecution of developers of privacy tech and crypto mixers like Samourai Wallet and Tornado Cash.
Should the regulators go after bad actors using privacy tech or the developers of the platform? Is privacy a crime? Well, these are some of the unanswered questions across Crypto Twitter after Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill pleaded guilty last week.
The outcome of the ongoing trial of Tornado Cash’s Roman Storm will help answer the aforementioned questions.
It remains to be seen whether the renewed pushback from the agency and other crypto leaders will influence the legal outcome.
