SEC Commissioner Hester Peirce has suggested that United States regulators should examine zero-knowledge proofs and digital credentials to the extent that they can potentially cut down on the amount of KYC and AML data collected.
At the SIFMA 2026 Digital Assets Conference in New York on September 23, Peirce said banks regularly collect large amounts of identity and transaction data to comply with legislation.
She explained that this data gathering across institutions leads to repositories of sensitive data. These views are her own and not the views of the SEC.
The proposal for attribute-based credentials would allow, for example, a person to show that they are above a certain age, that they are a citizen of a particular country, that they are an accredited investor, or that they have passed through sanctions screening.
Then, zero-knowledge proofs could verify such conditions are satisfied without revealing information such as names, addresses, or income.
Peirce did not endorse doing away with KYC, transaction monitoring or AML obligations. Instead, she continued questioning why all regulated entities need to collect the same underlying information if that work could be done by someone else, such as a trusted third party verification service. Current broker-dealer Customer Identification Program requirements remain in effect.
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Before Peirce’s speech, the SEC’s Crypto Task Force had already been exploring privacy-preserving identity technology, having met in July with representatives from Aztec Laboratorium Limited to discuss ZKPassport and cryptographic identity proofs.
According to Aztec, the technology verifies government-issued identity documents on the user’s device and generates claims like age, jurisdiction, or sanctions status without sending identity data to a business. The SEC did not accept these claims. In its 2025 federal report, zero-knowledge proofs were mentioned among solutions to authenticate identity checks without revealing personal information.
Peirce also discussed the SEC’s Innovation Exemption, issued on September 17, for tokenized NMS stocks, which granted interim conditional relief to eligible venues and liquidity providers to allow permissioned AMM pools to support trading in tokenized NMS stocks while the Commission considers permanent rules.
The exemptions last until 17 September 2031, although the framework also imposes limits on which securities can be covered, as well as trading volumes and disclosure requirements. The rights associated with a tokenized stock must match the rights of the underlying stock, while synthetic products tracking a stock’s price are excluded.
Since Peirce’s zero knowledge proposal is separate from the Innovation Exemption and does not contain any changes to customer-identification requirements, the SEC has not yet approved such cryptographic proofs as an alternative to KYC documentation requirements.
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Her remarks suggest that regulators ask themselves whether privacy-preserving technology can meet their compliance goals and reduce unwanted collection of user data.
