SEC’s Peirce proposes privacy-first KYC with ZK proofs
7 Regulation SEC’s Hester Peirce suggests zero-knowledge proofs for crypto KYC, enabling compliance checks without storing sensitive user data.
SEC Commissioner Hester Peirce has introduced a new approach to KYC and AML compliance for crypto platforms, focusing on zero-knowledge proofs and verifiable credentials. Speaking at SIFMA’s Digital Assets Conference, Peirce highlighted that current data collection practices create large, centralized databases of personal information, posing privacy risks and challenges for law enforcement. Her proposed model would enable platforms to verify essential requirements—such as age, jurisdiction, and sanctions status—without collecting or storing sensitive documents like passports or addresses. Instead, a trusted issuer would review original documents and issue a cryptographically signed credential, which users would store in a digital wallet. Platforms could then use zero-knowledge proofs to confirm compliance without accessing underlying data. Peirce emphasized that these are her personal views, not official SEC policy, and that existing legal data retention obligations still apply. The proposal seeks to balance regulatory compliance with enhanced privacy for crypto users.
