SEC Commissioner Hester Peirce speaks out in defense of financial privacy and calls for the modernization of laws in the digital age.
She emphasized that the current financial surveillance system is too invasive and no longer suitable for today's digital economy, especially in the context of flourishing cryptocurrency and decentralized transactions.
MAIN CONTENT
The U.S. financial system has become a surveillance state with outdated laws.
Cryptocurrency is seen as a tool for protecting privacy in digital transactions.
The SEC is striving to adjust laws to promote financial innovation and protect privacy.
How has the U.S. financial system become a surveillance state?
According to Commissioner Hester Peirce, the Bank Secrecy Act (BSA) has turned banks into government surveillance tools for over 55 years. In 2024 alone, up to 324,000 financial institutions submitted more than 25 million transaction reports, including 4.7 million suspicious activity reports.
She also pointed out how the law allows the government access to financial records through third-party mechanisms without a search warrant, while the SEC monitors each investor transaction through the Consolidated Audit Trail (CAT) system even without signs of wrongdoing. This reflects the extensive and outdated surveillance of the U.S. financial legal system.
How is cryptocurrency seen as a tool for protecting privacy?
Commissioner Peirce compares today's digital privacy to the use of cash in the past, allowing transactions without revealing personal information. She emphasizes that imposing financial surveillance laws on decentralized and open-source blockchain protocols is "futile" due to their immutable and permanently public nature.
Mandating open protocols to comply with financial surveillance is an impractical and counterproductive action in the digital age.
Hester Peirce, SEC Commissioner, speaks at the Blockchain Science Conference, August 2024
The case of Roman Storm, co-founder of Tornado Cash, is being monitored as an important test of liability for developers when their platform is alleged to be a money laundering tool, even though the technology itself is neutral. This reflects a deep debate about privacy and responsibility in the cryptocurrency environment.
Does history repeat itself with cryptocurrency regulation and privacy?
Peirce recalls the legal battle of the 1990s for citizens' right to use strong encryption to protect personal data against government restrictions for national security reasons. This event illustrates the valuable experience of protecting privacy in a developing technological environment.
Today, encryption is the foundation for protecting personal information in email, online banking, and e-commerce, demonstrating that historical lessons remain valuable in safeguarding privacy in the digital age.
How did the SEC Commissioner respond to excessive regulations with DeFi?
Peirce voiced opposition to the canceled DeFi broker rule, which required DeFi platforms to report detailed user transactions to the IRS. She remarked that this regulation would turn platforms into "user surveillance allies", jeopardizing privacy and financial freedom.
This regulation, enacted under the previous administration, was officially repealed in April 2024 by President Trump, marking a significant rollback to prevent excessive surveillance policies from being imposed on new technology.
How did the cryptocurrency industry respond to Peirce's speech?
Her speech received strong support from industry leaders. Peter Van Valkenburgh, Executive Director of CoinCenter, described it as "the clearest defense of financial privacy in the context of cryptocurrency." Nate Geraci, Chairman of NovaDius Wealth Management, urged the cryptocurrency community to read these statements carefully to gain a deeper understanding of privacy.
What new actions is the SEC taking with the 'Project Crypto' initiative?
SEC Chairman Paul Atkins announced Project Crypto, aimed at modernizing outdated securities laws and supporting the development of crypto assets. The goal is to protect financial innovation and adjust laws to fit the modern blockchain market.
"We are committed to creating a flexible legal framework so that cryptocurrency developers can promote innovation while still complying with the law."
Paul Atkins, Chairman of the SEC, August 2024
The SEC will review and may repeal outdated regulations. Meanwhile, the White House is drafting an executive order to deal with banks obstructing investors and cryptocurrency companies, reversing restrictions imposed during the Biden administration.
Frequently Asked Questions
How does the Bank Secrecy Act affect financial privacy?
The BSA requires banks to report suspicious transaction activities, turning them into surveillance agencies for the government, thereby reducing users' privacy.
Does cryptocurrency really protect privacy like cash does?
Cryptocurrency with open-source protocols allows transactions without revealing personal information like cash transactions in the past, enhancing anonymity.
Why was the DeFi broker rule opposed and canceled?
This regulation requires DeFi platforms to report detailed transactions, leading to excessive user surveillance, undermining decentralization and privacy.
What changes will the SEC make to securities laws to accommodate cryptocurrency?
The Project Crypto initiative aims to modernize regulations, abolish outdated laws, and promote innovation for sustainable development in the cryptocurrency market.
Will the legal situation of Tornado Cash affect cryptocurrency developers?
This case is viewed as a measure of legal risk for developers when their products may be seen as tools for illegal activities.
Source: https://tintucbitcoin.com/sec-hester-peirce-bao-ve-tien-dien-tu/
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