Is financial privacy a crime? SEC commissioner supports Blockchain against regulation, the crypto community calls for reform of the Bank Secrecy Act.

U.S. SEC Commissioner Hester Peirce (Hester Peirce) recently publicly supported the use of blockchain and encryption protocols to protect on-chain financial privacy technologies, urging regulatory agencies to embrace privacy tools and avoid unnecessary financial surveillance of legitimate users. She also pointed out that the Bank Secrecy Act (BSA) is outdated and costly, and needs reform. Leaders in the crypto industry, including major CEXs in the U.S. and advocacy organizations, have responded, criticizing the drawbacks of current KYC policies and the issues of sensitive data collection. This statement comes at a time when privacy technology developers (such as Samourai Wallet and Tornado Cash) are facing legal lawsuits, raising the core controversy of "does privacy constitute a crime."

Regulatory Attitude Shift: Embracing Privacy Technology, Not Fear

Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), has expressed support for using blockchain and encryption protocols to protect users' on-chain financial privacy. In a statement on August 4, Peirce acknowledged that centralized regulatory bodies like the SEC are concerned about losing control over user data, making it difficult to track down wrongdoers.

However, she urged regulators to embrace privacy-enhancing tools that allow law-abiding citizens to live without suffering from "unnecessary financial surveillance."

"These tools should not be seen as a threat; we should embrace them to help humanity live more freely, free from arbitrary financial surveillance." She added that, "Although some people use these tools for evil, considering the technology itself as a criminal infringes on the privacy rights of legitimate users."

Calls for Reform of the Bank Secrecy Act: High Compliance Costs and Privacy Concerns

Pierce mentioned that the Bank Secrecy Act (BSA), aimed at curbing money laundering, is one of the driving factors behind increased surveillance. She pointed out that, in addition to privacy issues, the high costs associated with compliance and reporting of users' financial transactions make it imperative to review the BSA in a timely manner.

"The questioning of the costs, utility, and privacy impacts of BSA has made reforming BSA a timely topic."

Core Demand: Protect the Right to Privacy in Communication and Value Transfer

The committee member concluded that we should work together to ensure that people can communicate privately and transfer value.

"We should take concrete measures to protect people's ability to communicate privately and to transfer value privately, just as physical coins were used when the Fourth Amendment was drafted."

Encryption industry response: Criticizing KYC policies, pointing out outdated legal abuses

As expected, several leaders and advocacy organizations in the encryption field seem to support her position.

In fact, Paul Grewal, the Chief Legal Officer of a leading CEX in the United States, has questioned the "Know Your Customer" (KYC) requirements under the BSA. He stated that,

"The government is unnecessarily forcing companies to collect and transmit massive amounts of sensitive customer data, which customers deeply resent." The CEO of a leading CEX in the United States also agreed with Gruwal's view and added that the BSA was designed for the paper era and is not suitable for the current on-chain digital world.

Peter Van Valkenburgh, the executive director of the advocacy organization Coin Center, added that most federal laws are being abused at the expense of legitimate users' rights.

Core Controversy: Does Privacy Constitute a Crime? What is the Responsibility of Technology Developers?

The backdrop of this debate is that developers of privacy technologies and cryptocurrency mixers (such as Samourai Wallet and Tornado Cash) are continuously facing lawsuits.

Should regulators pursue the bad actors using privacy technology, or should they hold the platform developers accountable? Does privacy itself constitute a crime? These questions became a hot topic of discussion on Crypto Twitter after Samourai Wallet co-founder Keonne Rodriguez ( and William Lonergan Hill ) pleaded guilty last week.

The outcome of the ongoing trial of Tornado Cash developer Roman Storm ( will help answer the key questions mentioned above.

It is currently unclear whether the new round of questioning from SEC commissioners and crypto leaders will affect the final legal ruling.

Conclusion: SEC Commissioner Peirce's statement provides rare regulatory support for encryption privacy technology, directly pointing to the obsolescence and abuse of the Bank Secrecy Act, resonating with the industry's resistance to the current KYC policies and calls for user data collection. The judicial challenges faced by privacy technology developers are bringing the boundary issues of "technological neutrality" and "developer responsibility" to the forefront. The final ruling in the Tornado Cash case may become a key watershed in defining on-chain financial privacy rights and regulatory power.