SEC Commissioner Peirce advocates zero-knowledge proofs for KYC/AML

SEC: The U.S. Securities and Exchange Commission is the primary federal agency responsible for enforcing securities laws, regulating markets, and protecting investors in the United States. It recently issued the Innovation Exemption to provide temporary relief for trading tokenized National Market System stocks through automated market makers on permissioned venues. In this news, the SEC's framework serves as a bridge allowing domestic onchain trading of tokenized U.S. equities while longer-term rules are developed. Hester Peirce: Hester Peirce is a Commissioner at the U.S. Securities and Exchange Commission and leads its Crypto Task Force, known for supporting technology-driven regulatory approaches to digital assets. In remarks at the SIFMA Digital Assets Conference on September 23, 2026, she outlined how zero-knowledge proofs and attribute-based credentials could replace data-intensive KYC/AML processes to reduce privacy risks while maintaining compliance verification. She also positioned the recent Innovation Exemption as a practical step to enable tokenized securities trading domestically rather than ceding the market overseas. Tokenization Trend: Recent SEC actions aim to facilitate onchain trading of tokenized U.S. equities to retain domestic market activity amid growing global interest in digital asset representations of traditional securities. Regulatory Approach: SEC Commissioner Peirce advocated shifting from prescriptive data collection in financial surveillance toward attribute-based verification technologies that confirm compliance facts without exposing underlying personal information. Innovation Exemption: The SEC issued a temporary, conditional exemption in September 2026 to permit tokenized NMS stock trading via automated market makers on Tokenized Securities Venues without triggering full exchange or dealer registration requirements.