Top crypto executives are apparently sitting down with SEC regulators, passionately arguing that blockchain privacy tools have real, everyday benefits that stretch beyond criminal activities.
At the SEC’s latest roundtable on financial surveillance and privacy, StarkWare’s general counsel, Katherine Kirkpatrick Bos, noted that we shouldn’t jump to conclusions that everyone building or using blockchain privacy tools is up to no good.
“Why start with the idea that someone has to prove they’re playing by the rules or using blockchain privacy tools for legit reasons?” she asked.
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“Flip it around and assume they’re doing things right until there’s clear evidence otherwise.”
She acknowledged that there are bad actors who exploit blockchain privacy tools but stressed the need for balance.
“Of course wrongdoers tap into these blockchain privacy tools, yet we can’t throw out the good with the bad.”
Meanwhile, Wayne Chang, founder and CEO of SpruceID, pointed out the growing demand from stablecoin users and how many want solid privacy features before jumping fully on-chain.
“Tons of stablecoins are waiting in the wings, and they’d go live on blockchains tomorrow if strong blockchain privacy tools were there,” he explained.
“Demand for privacy-focused chains is only going to explode.”
Chang stayed optimistic, hoping regulators keep talking with the industry to protect user privacy while building effective safeguards.
Outdated Checks in a High-Tech World
The panel dug deep into old-school Know Your Customer (KYC) and Anti-Money Laundering (AML) rules, questioning if they’re still cutting it now that AI is changing everything.
Kirkpatrick Bos highlighted how AI has made traditional manual checks feel ancient and easy to fool.
“The whole KYC/AML setup looks outdated, full of holes, and not very effective,” she said.
Still, when big centralized players move money, some oversight makes sense to block real criminals. She called snapping a photo of your driver’s license ridiculous.
“Anyone can whip up a fake ID online in seconds; it’s absurd.”
Can blockchain privacy tools step in to tighten security against fraudsters while shielding personal details?
Projects are already experimenting, like Sam Altman’s World initiative, handing users crypto keys to prove they’re real people without giving away too much.
However, SEC Chair Paul Atkins warned that mishandling this could turn crypto into the ultimate surveillance machine.
“If we go too far, treating every wallet like a bank, every bit of code like an exchange, and every trade as something to report, then we’d build a total financial watchdog state,” he cautioned.
Nevertheless, Atkins believes smart tech can serve both sides, like deterring threats for the government while keeping everyday privacy intact for everyone.
