Blockchain Privacy Shouldn’t Automatically Raise Red Flags—SEC Chair

Crypto executives pushed the US Securities and Exchange Commission on Monday to reconsider its approach to blockchain privacy, arguing that not all users of these tools are criminals.

The meeting, the SEC’s sixth crypto-focused roundtable this year, drew sharp exchanges between regulators and industry representatives over how privacy, identity verification, and stablecoin adoption intersect.

SEC Chair Paul Atkins opened the session with a warning: mishandling privacy could turn crypto into “the most powerful financial surveillance architecture ever invented.”

He cautioned that treating every wallet like a broker or every protocol as an exchange could create a system where every transaction is monitored.

Presumption Of Good Intent For Blockchain Privacy Users

Katherine Kirkpatrick Bos, general counsel at StarkWare, told reporters that regulators should not assume users of privacy tools are primarily engaged in wrongdoing. “Why must someone prove they are compliant upfront?” she asked.

“Instead, shouldn’t the starting point be that they are using it for legitimate purposes until proven otherwise?” She added that criminal use exists, but a balance is needed to avoid unfair suspicion.

More highlights from the @SECGov Crypto Task Force Roundtable on Financial Privacy & Surveillance

Three powerful voices made the case for privacy in crypto at the SEC’s roundtable:

J.W. Verret @theblockprof (George Mason Law) dropped a legal bombshell: He can’t find statutory… pic.twitter.com/jtSkFaltRK

— Paul Brigner (@paulbrigner) December 15, 2025

On Blockchain, AML And KYC Rules

The discussion also examined anti-money laundering (AML) and Know Your Customer (KYC) rules. Kirkpatrick Bos criticized current practices, noting that photo IDs can be faked in seconds.

She suggested cryptography-based tools could verify identity without exposing unnecessary personal information, such as home addresses, while still preventing fraud. Projects like Sam Altman’s World are already testing cryptographic keys that prove users are human without revealing private data.

Wayne Chang, CEO of SpruceID, said privacy is a growing demand among users of stablecoins. Reports indicate millions of dollars in stablecoins could move on-chain if privacy features are available.

Some percentage of users will want to keep transactions private, Chang said. Privacy can drive adoption of stablecoins that haven’t fully migrated to on-chain systems, he said.

Atkins noted that blockchain and privacy tools have legitimate uses, including helping firms execute trades without tipping off competitors. Balancing public safety with privacy is critical, the SEC chief said.

SEC Commissioner Hester Peirce, who leads the agency’s crypto task force, opened the roundtable alongside Atkins and Commissioner Mark Uyeda, discussing ways regulators might protect investors while respecting privacy as blockchain financial activity grows.

Blockchain: Ongoing Tensions On The Spotlight
Industry insiders said the roundtable did not result in immediate policy changes but highlighted ongoing tensions.

Regulators are weighing the benefits of privacy against risks of misuse, while market participants push for protections that could influence adoption and growth.

Based on reports, these conversations are likely to continue as technology evolves and crypto use becomes more mainstream.

Featured image from Yellow, chart from TradingView