Outgoing Securities and Exchange Commission Commissioner Hester Peirce has called on regulators to rethink how they monitor the financial system, arguing that oversight should rely on less personal data collection, not more.

Speaking Wednesday on digital identity systems and decentralized networks, Peirce directed sharp criticism at know-your-customer and anti-money-laundering rules — obligations that require financial firms to collect and verify customer identity data, and a longstanding flashpoint in U.S. crypto policy debates.

Her remarks arrive as U.S. regulators push ahead with crypto rulemaking. Peirce, who earned the nickname "crypto mom" for her friendly approach to overseeing the industry, is set to leave the SEC in November.

"Today society is at a crossroads," Peirce said at SIFMA's Digital Assets Conference in New York. Her prepared remarks are published on the SEC's website.

"Down one path lies the status quo: more data collection, more intermediary surveillance, more 'know your customer' requirements that turn our financial rails into a panopticon."

"Down the other path lies an opportunity to use new technologies to improve our ability to catch criminals while collecting less personal information than ever before, and monitoring more sparingly to protect Americans' privacy."

Peirce argued that accumulating ever more data on law-abiding customers in the name of catching criminals does not work. In her view, bigger "haystacks" only make the needles harder to find, while every stored data point raises the risk of leaks or misuse. She criticized a regulatory mindset fixated on the idea that "data go up," drawing a comparison to crypto enthusiasts' obsession with rising prices.

As an alternative, she highlighted cryptographic tools such as zero-knowledge proofs and attribute-based credentials, which can confirm facts like a person's age, accredited-investor status, or absence from sanctions lists without revealing the underlying personal details. These are same class of technologies already used across parts of the crypto industry to power privacy-preserving payment and identity systems.

Peirce also urged the SEC to let firms rely on identity checks already performed by other regulated institutions, rather than requiring every firm to collect and store the same sensitive information.

The SEC's posture toward crypto has shifted considerably. Under President Joe Biden, the agency was tough on the space, with Biden-appointed former Chair Gary Gensler frequently suing major crypto companies for allegedly selling unregistered securities. Peirce was appointed to lead the Crypto Task Force in 2025, and the regulator has taken a far friendlier approach to the sector since Donald Trump became president again.

Regulators now say they want to create clear rules for the fast-moving industry, even though landmark legislation, the Clarity Act, was blocked last week. With Peirce leaving in November, the direction of the Crypto Task Force she leads and the fate of the Clarity Act are key markers to watch as that rulemaking push continues.

Despite her alias, Peirce has previously said she would not describe herself as an advocate of the industry, but rather as a "freedom maximalist."

This article first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.