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Points of Focus
- Peirce confirmed she is in her penultimate week as an SEC Commissioner.
- She proposed zero-knowledge proofs to replace broad KYC data collection.
- Her exit leaves the SEC with only Atkins and Uyeda as commissioners.
US Securities and Exchange Commission (SEC) Commissioner Hester Peirce confirmed she is in her penultimate week at the agency, speaking Sep. 23 at the Securities Industry and Financial Markets Association’s (SIFMA) Digital Assets Conference in New York, a more immediate timeline than the November departure previously anticipated when she announced plans to join Regent University School of Law as an associate professor.
She used the appearance to lay out a detailed case for replacing broad financial-surveillance data collection with cryptographic tools that verify specific facts without exposing underlying personal information.
Peirce’s zero-knowledge proof pitch for financial identity verification
Peirce argued that attribute-based credentials and zero-knowledge proofs could let individuals prove specific facts, age, citizenship, accredited investor status, absence from sanctions lists, without revealing the underlying data that generated those facts.
“A zero-knowledge proof can tell a counterparty ‘Yes, this person meets your requirement’ without that counterparty knowing your name, income, or address,” she said.
Hester Peirce with another banger
“Today society is at a crossroads. Down one path lies the status quo: more data collection, more intermediary surveillance, more “know your customer” requirements that turn our financial rails into a panopticon. Down the other path lies an…
— Alex Thorn (@intangiblecoins) September 24, 2026
She proposed a specific structural change: letting regulated entities rely on third-party identity verification rather than requiring each firm to collect and store the same customer data independently. “If a customer has already been verified by one regulated, trustworthy entity, why not make it the norm for every subsequent institution to rely on that work?”
Peirce said, calling the current duplicative approach an unnecessary risk because the same sensitive information ends up copied and stored across dozens of institutions.
Why Peirce says current KYC rules are not working
Peirce’s critique of existing Know-Your-Customer (KYC) procedures targeted the existing Customer Identification Program and Suspicious Activity Report framework, arguing that decades of “collect more and more data” have not worked particularly well while technology has moved past it. “The expense of running this system seems to dwarf its effectiveness at stopping bad actors,” she said, citing a Cato Institute analysis of the volume of Suspicious Activity Reports financial institutions file.
Her proposed alternative rests on a specific technical claim about permissionless networks: that a blockchain is truly permissionless “when its core protocol operates through automated, immutable code rather than through the discretionary actions of an identifiable party, when there is no custodial intermediary standing between users and their assets, and when all participants and transactions are treated neutrally.”
Public blockchains, she argued, already produce permanent, auditable transaction records that law enforcement can analyze with existing forensic tools, reducing the need for the kind of upfront data collection KYC rules currently require.
Peirce’s exit leaves the SEC with a thin commissioner roster
Peirce’s departure removes the SEC’s most consistently pro-crypto voice and the head of its Crypto Task Force at a moment when the agency is mid-stream on major crypto rulemaking she has personally shaped, including this month’s Innovation Exemption for tokenized stock trading.
Her exit leaves just two sitting commissioners, Chairman Paul Atkins and Commissioner Mark Uyeda, with no Democrats currently serving on the Commission. The reduced roster could complicate contested rulemaking and leave the SEC with limited capacity to resolve disagreements through commission votes.
Peirce’s speech also added a detail to how the Innovation Exemption itself should be understood: she described it as “actually two exemptions in one order,” which Atkins has separately called “a bridge toward durable rulemaking” rather than a permanent settlement of tokenized securities’ legal status.
Peirce noted that SIFMA has already submitted a preliminary reaction to the exemption as part of the Commission’s public comment process, and said she shares the industry group’s desire to move toward final rulemaking as quickly as possible.
Peirce tied her departure to her policy argument. She compared her reluctance to leave Washington for an upcoming move to Virginia Beach to the broader pattern she sees in financial regulation, where fear of change can crowd out honest evaluation of what new technology actually makes possible. No replacement for her seat has been named as of this writing.
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