The US SEC raises concerns about the balance between crypto surveillance and privacy.The US SEC raises concerns about the balance between crypto surveillance and privacy.

SEC sounds alarm on crypto surveillance vs privacy

2025/12/16 08:31
4 min read
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Officials from the US Securities and Exchange Commission (SEC) met with executives from the cryptocurrency industry on Monday, December 15.

During this time, they discussed issues regarding financial monitoring and user privacy. This meeting illustrates part of the federal agency’s long-standing goal of enhancing the regulatory framework set up for digital assets.

During the roundtable discussion, Hester Peirce, a Commissioner at the SEC widely known as the “Crypto Mom” for her strong support of the digital asset industry, along with Paul Atkins, the chair of the SEC, and Commissioner Mark Uyeda, took the initiative to elaborate on effective ways in which regulators can safeguard investors while also taking privacy concerns into account. 

This discussion took place as the SEC noted the significant rise of blockchain-based financial activities.

Atkins noted that cryptocurrency could end up as a strong tool for financial surveillance

Considering the heightened adoption of cryptocurrencies among firms, Atkins argued that cryptocurrency could position itself as the most powerful financial surveillance system that has ever existed globally. To achieve this accomplishment, the SEC chair declared that the situation will rely on how the US government chooses to regulate it.

He also pointed out that the federal agency used to view every digital wallet as a broker in the past. This meant that they demanded more transaction reports from these digital wallets.

After several considerations, Peirce agreed with Atkins. As the head of the SEC’s Crypto Task Force, she proposed that regulators should carefully reconsider the most effective time and method for monitoring financial transactions as the crypto market continues to expand.

“Our country’s decline in financial privacy and its related rules need an update, and cryptocurrency is pushing for this change,” Peirce said. According to her argument, cryptocurrency is an essential aspect of the country’s financial system, as it establishes new methods for effective transactions that do not rely on financial intermediaries, which are a critical component of their current financial surveillance system.

However, she pointed out that, as previously mentioned, public blockchains where multiple crypto transactions occur are visible to everyone. This finding has raised the need for tools that safeguard privacy.

The individuals who attended the surveillance and privacy roundtable included representatives from the privacy-focused cryptocurrency Zcash, the Blockchain Association, and the Crypto Council for Innovation. This event marked the sixth occasion organized by the task force to discuss various parts of digital asset regulation and policy since the “Crypto Mom” began heading the team in January. 

Considering the intense nature of the situation, several analysts decided to weigh in on the situation. They claimed that many people in the crypto industry have raised concerns regarding privacy practices. These concerns have been raised at a time when the market is surging swiftly while regulators, lawmakers, and courts attempt to tackle this challenge.

US senators face a limited time to create laws for the digital asset market

During this roundtable discussion, it was discovered that as Caroline Crenshaw, a Commissioner at the SEC, prepared to exit the agency in less than a month, Senators in the United States faced limited time to develop laws that would establish a comprehensive framework for the digital asset market before 2026. 

Sources close to the situation mentioned that the early versions of a proposed bill might grant the Commodity Futures Trading Commission more power over digital assets while shifting the SEC’s focus.

On the other hand, it was confirmed that these senators have been actively negotiating to bring the CLARITY Act to a vote before the end of this year. This decision followed the bill’s passage in July through the House of Representatives.

Still, sources argued that there is a high likelihood that Republican leaders might not achieve this goal as of Monday this week.

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