U.S. SEC Commissioner: Blockchain transparent ledgers combined with zero-knowledge proofs can reshape financial regulation

Hester Peirce, a commissioner of the U.S. Securities and Exchange Commission (SEC), stated at the SIFMA Digital Assets Conference that regulators should reconsider traditional financial monitoring methods, shifting from "collecting more data" to utilizing new technologies for more precise verification.

Peirce mentioned that technologies like zero-knowledge proofs can verify whether users meet requirements such as age, citizenship, accredited investor status, or sanctions lists without disclosing underlying personal information like names, income, or addresses.

Hester Peirce suggested that the federal government and regulatory agencies adopt attribute-based verification when technically feasible and allow registered entities to rely more on third-party identity verification to reduce the redundant collection and storage of sensitive information.

Peirce also stated that public blockchains have permanent, public, and auditable transaction records, and combined with blockchain forensic tools, they are expected to enhance the ability to track illegal activities while reducing unnecessary data collection.