On 23 September 2026, US Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce advocated reforms to financial surveillance. Speaking at SIFMA’s Digital Assets Conference in New York, she highlighted cryptography, digital identity and third-party verification. Her recommendations focused on reducing unnecessary personal data collection while supporting the detection of financial crime. Peirce emphasised that her views did not necessarily represent the SEC. Her speech did not amend existing customer identification or anti-money laundering requirements.1
Reviewing KYC and AML Data Collection
Peirce in her statement questioned whether expanding know-your-customer (KYC) and anti-money laundering (AML) data collection delivers proportionate enforcement benefits. She highlighted compliance costs, duplicated information and the risks associated with retaining sensitive personal and business data.She urged regulators to reconsider whether they need particular information or merely confirmation of a relevant fact. She also questioned whether transaction reporting thresholds are too low. In her view, cheaper data collection should not itself justify lowering those thresholds.1
Digital Identity and Zero-Knowledge Proofs
Peirce highlighted credentials that verify specific attributes without disclosing all the underlying personal information. Her examples included age, citizenship, accredited investor status and absence from sanctions lists.She described zero-knowledge proofs as a potential means of confirming eligibility without revealing names, income or addresses.
Peirce stated:
“Tools exist to limit the information individuals need to provide and the number of entities to which they must provide it.”
She called for a regulatory framework supporting greater adoption of these tools. Her proposed approach would favour verification of relevant attributes wherever technologically feasible.2
Third-Party Verification Under Customer Identification Programmes
Peirce also called for easier reliance on third-party identity verification for Customer Identification Programme (CIP) purposes. She argued that repeated verification can spread the same customer’s sensitive information across multiple institutions. She favoured greater reliance on verification already undertaken by a regulated, trustworthy entity.
Existing broker-dealer rules already permit reliance on another financial institution in specified circumstances. Under 31 CFR § 1023.220(a)(6), that reliance must be reasonable. The other institution must satisfy specified AML and federal supervision requirements. The arrangement must also include a contract requiring annual certification of the relevant AML programme and CIP commitments.3 Peirce’s recommendation sought wider use of such reliance arrangements. It did not expand the existing regulatory conditions.
Permissionless Networks and Financial Surveillance
Peirce questioned whether regulators should require an intermediary solely to facilitate information collection. Her description of permissionless infrastructure emphasised automated, immutable protocols and the absence of custodial intermediaries. It also included neutral treatment of participants and transactions. She argued that public blockchain records could support investigations through blockchain forensics. Her broader position was that financial privacy and effective enforcement could both benefit from technological change.4
Tokenised Securities and the Innovation Exemption
Peirce separately discussed the SEC’s Innovation Exemption, announced on 17 September 2026. The order provides temporary, conditional relief for certain tokenised National Market System (NMS) stock trading. It covers tokenised securities venues using permissioned automated market makers and liquidity pools, alongside qualifying liquidity providers. Conditions include limits on symbols and trading volumes, equivalent shareholder rights and coordination with underlying market trading stoppages.5 Peirce described the exemption as an interim step towards durable rulemaking. She supported developing a framework for intermediaries and venues facilitating tokenised securities trading.5
Footnotes
- SEC, Hester M. Peirce, Looking for Change in Haystacks: Remarks before SIFMA’s Digital Assets Conference, 23 September 2026 (“Peirce Remarks”), introductory disclaimer and discussion of financial surveillance, KYC and AML.
- Peirce Remarks, discussion of attribute-based credentials, zero-knowledge proofs and information collection.
- Peirce Remarks, discussion of third-party identity verification; 31 CFR § 1023.220(a)(6), reliance on another financial institution.
- Peirce Remarks, concluding discussion of intermediaries, permissionless networks and blockchain forensics.
- SEC, SEC Issues “Innovation Exemption” to Facilitate the Trading of Tokenized NMS Stock and Request for Comment, Release No. 2026-90, 17 September 2026; Peirce Remarks, opening discussion of the exemption.
