{"id":78731,"date":"2026-09-27T11:55:09","date_gmt":"2026-09-27T11:55:09","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/secs-hester-peirce-wants-zero-knowledge-proofs-to-fix-kyc-system\/"},"modified":"2026-09-27T11:55:09","modified_gmt":"2026-09-27T11:55:09","slug":"secs-hester-peirce-wants-zero-knowledge-proofs-to-fix-kyc-system","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/secs-hester-peirce-wants-zero-knowledge-proofs-to-fix-kyc-system\/","title":{"rendered":"SEC&#8217;s Hester Peirce Wants Zero-Knowledge Proofs to Fix KYC System"},"content":{"rendered":"<p><b>(Originally posted on : Bitcoin News )<\/b><br \/>\n<\/p>\n<div>\n<div class=\"@container mb-[25px] rounded-sm overflow-clip py-0.5 pr-0.5 pl-2.5 bg-success-100\">\n<div class=\"flex flex-col gap-m overflow-clip rounded-[6px] !bg-success-10 p-3 @[420px]:p-m\">\n<h2 class=\"m-0 flex items-center gap-s text-[19px] !text-[#1c1c1c] md:text-[20px]\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"10\" viewbox=\"0 0 16 10\" fill=\"none\" class=\"shrink-0 text-success-100\" aria-hidden=\"true\"><path d=\"M1 1.5h14\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><path d=\"M1 8.5h10\" stroke=\"currentColor\" stroke-width=\"2.5\" stroke-linecap=\"round\"\/><\/svg><span>Key Takeaways<\/span><\/h2>\n<ul class=\"m-0 flex list-none flex-col gap-m pl-0\">\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">SEC Commissioner Hester Peirce urged replacing 100% data-heavy surveillance with zero-knowledge proofs.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">World Foundation expert notes zero-knowledge proofs eliminate centralized databases targeted by the majority of hacks.<\/span><\/li>\n<li class=\"m-0 flex items-start gap-s !text-[#434248]\"><span class=\"mt-2 size-2 shrink-0 rounded-full bg-success-100\" aria-hidden=\"true\"\/><span class=\"text-body\">The SEC must establish 1 regulatory sandbox for institutions to test zero-knowledge identity circuits next.<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2>Rethinking Legacy KYC Frameworks<\/h2>\n<p>Outgoing Securities and Exchange Commission (SEC) Commissioner Hester Peirce has <a href=\"https:\/\/www.sec.gov\/newsroom\/speeches-statements\/peirce-looking-change-haystacks-remarks-sifma-s-digital-assets-conference-092326\" target=\"_blank\" rel=\"noopener noreferrer\">called for an overhaul<\/a> of the U.S. government\u2019s financial surveillance framework. Speaking at a Securities Industry and Financial Markets Association (SIFMA) event, Peirce advocated replacing data-heavy compliance mandates with zero-knowledge (ZK) proofs and attribute-based credentials.<\/p>\n<p>Peirce challenged the foundational premises of legacy <a href=\"https:\/\/www.bitcoin.com\/get-started\/what-is-know-your-customer\/?_gl=1*ek9x8i*_gcl_au*OTk5NTQzMjAuMTc4OTMyOTIwMQ..*_ga*MTU3OTQwMTMwLjE3NzM3NjQ2MDc.*_ga_ERLPF60ZDD*czE3OTA0NTQzNjgkbzgxNSRnMCR0MTc5MDQ1NDM2OCRqNjAkbDAkaDA.\" target=\"_blank\" rel=\"noopener noreferrer\">know your customer<\/a> (KYC) and <a href=\"https:\/\/markets.bitcoin.com\/glossary\/aml?_gl=1*ek9x8i*_gcl_au*OTk5NTQzMjAuMTc4OTMyOTIwMQ..*_ga*MTU3OTQwMTMwLjE3NzM3NjQ2MDc.*_ga_ERLPF60ZDD*czE3OTA0NTQzNjgkbzgxNSRnMCR0MTc5MDQ1NDM2OCRqNjAkbDAkaDA.\" target=\"_blank\" rel=\"noopener noreferrer\">anti-money laundering<\/a> (AML) frameworks, which mandate that institutions continuously collect personal data. She cautioned that current rules risk turning financial infrastructure into a regulatory \u201cpanopticon\u201d driven by data maximalists who operate under the flawed assumption that collecting more data improves market integrity.<\/p>\n<p>\u201cWe build ever bigger data haystacks on the theory that we will find a needle or two inside,\u201d said Peirce, whose message has resonated with privacy advocates. \u201cThe bigger haystack, however, makes it harder to find the needles.\u201d<\/p>\n<p>Every piece of confidential business and personal data collected creates significant risks of <a href=\"https:\/\/news.bitcoin.com\/coinbase-security-impersonation-scheme-exposed-as-authorities-claim-nearly-16m-was-siphoned\/\">mishandling or data breaches<\/a>, imposing huge costs on compliant institutions and everyday Americans alike.<\/p>\n<p>Although it has not been widely adopted by governments and regulatory agencies, ZK technology could potentially reduce unnecessary data collection while maintaining and enhancing the transparency of the underlying transaction record, according to Peirce.<\/p>\n<p>The SEC commissioner\u2019s call is backed by Remco Bloemen, head of blockchain at World Foundation, who also sees the technology working at scale.<\/p>\n<p>Bloemen told Bitcoin.com News that zero-knowledge proofs could realistically replace significant parts of traditional KYC and AML rules by allowing institutions to verify pass\/fail attributes without accessing underlying personal data. The key challenge, however, is translating each verification into a precise, computable circuit, including clear definitions for complex issues like aliases in sanctions screening or acceptable evidence of income and assets.<\/p>\n<h2>Regulatory Sandboxes Needed for Industry Adoption<\/h2>\n<p>While the underlying technical challenges are largely solved, broader adoption would require standardized, legally recognized definitions and reliable data sources. Production-grade age verification has already demonstrated that the model can work in practice.<\/p>\n<p>\u201cFor this to be adopted widely, in my opinion, the most important missing piece is a clearly defined regulatory sandbox where institutions can experiment with this new technology in close collaboration,\u201d Bloemen said. \u201cPrivacy-preserving KYC\/AML will have to be battle-tested and case law established before broad adoption is possible.\u201d<\/p>\n<p>Bloemen argues that <a href=\"https:\/\/news.bitcoin.com\/polygon-announces-zero-knowledge-identity-platform-for-web3\/\">zero-knowledge identity systems<\/a> could substantially reduce privacy and security risks by eliminating centralized databases containing sensitive KYC information, the primary target for large-scale breaches. While he considers the underlying technology mature, citing its successful use in securing billions of dollars, Bloemen acknowledges that transitioning to a new system would introduce new risks that institutions must identify and manage.<\/p>\n<p>Meanwhile, Peirce, who is set to leave the SEC before the end of the year, urged the commission and market participants to move toward attribute-based verification. She encouraged allowing registered entities to rely on third-party verification to reduce operational costs and mitigate cyber vulnerabilities.<\/p>\n<\/p><\/div>\n<p><a href=\"https:\/\/news.bitcoin.com\/technology\/secs-hester-peirce-wants-zero-knowledge-proofs-to-fix-kyc-system\/\">Source link <\/a><br \/>\n<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Originally posted on : Bitcoin News ) Key Takeaways SEC Commissioner Hester Peirce urged replacing 100% data-heavy surveillance with zero-knowledge proofs. World Foundation expert notes zero-knowledge proofs eliminate centralized databases targeted by the majority of hacks. The SEC must establish 1 regulatory sandbox for institutions to test zero-knowledge identity circuits next. Rethinking Legacy KYC Frameworks [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":78732,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[32],"tags":[],"_links":{"self":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/78731"}],"collection":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/comments?post=78731"}],"version-history":[{"count":0,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/posts\/78731\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media\/78732"}],"wp:attachment":[{"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/media?parent=78731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/categories?post=78731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdfundjunction.com\/blog\/wp-json\/wp\/v2\/tags?post=78731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}