Peirce urges less data collection in digital-asset identity checks

SEC Commissioner Hester Peirce used a September 23 digital-assets speech to call for a different approach to financial identity checks: verify the fact a transaction requires without repeatedly collecting the personal information behind it. Her remarks are an argument for future regulatory change, not a new SEC rule or a change to customer-identification duties today. Peirce explicitly said she was speaking for herself, not the Commission.

Peirce pointed to attribute-based credentials and zero-knowledge proofs as ways to show, for example, that a person meets an age, citizenship, accreditation or sanctions-screening condition without disclosing every underlying record to each counterparty. She argued that firms should ask whether they need a specific piece of personal information or only a verified answer to a narrower question. That distinction matters for digital-asset networks, where transactions may occur without the familiar chain of account-holding intermediaries.

The existing identification rules still apply

The current broker-dealer Customer Identification Program rule requires firms to establish procedures to form a reasonable belief that they know a customer's true identity. It permits reliance on another financial institution for specified identification steps only when the reliance is reasonable, that institution is appropriately regulated and subject to anti-money-laundering requirements, and the firms have a contract with annual certification. The rule does not provide a general permission to replace identification with an anonymous cryptographic proof.

FinCEN's customer-identification guidance likewise describes conditions for relying on another regulated institution's work. That existing path is narrower than Peirce's proposed norm of reusable verification across firms. Her speech does not specify a rule text, implementation date or agency vote that would make the broader model operative.

A privacy proposal, not an exemption

Peirce also referred to the SEC's September 17 innovation exemption for limited tokenized-securities trading, but her identity discussion raised a separate policy question: how regulators can preserve crime detection and investor protection while holding less personal data in more places. She argued that public ledgers and cryptographic credentials could help, while acknowledging that regulators would still need to decide which facts must be checked and who remains responsible for checking them.

For firms building digital-asset infrastructure, the useful takeaway is a possible direction of debate, not a compliance shortcut. Current identification obligations remain in force. Any move toward portable, privacy-preserving proofs would need a defined legal and supervisory framework before a broker-dealer could rely on it as a substitute for today's procedures.