Hester Peirce, aka ‘Crypto Mom,’ made the remarks in a speech on “Financial Privacy in the Digital Age” at the Science of Blockchain Conference on Monday.

Peirce used a “peanut butter and watermelon” anecdote to illustrate the value of disintermediation or removing intermediaries from processes, in this case, finances.

The pro-crypto commissioner was critical of financial surveillance and the banking system, stating that the 55-year-old Bank Secrecy Act (BSA) has “deputized American financial institutions as de facto law enforcement investigators.”

A Surveillance State

The current financial system is a surveillance state. In 2024, 324,000 financial institutions filed more than 25 million transaction reports, including 4.7 million “Suspicious Activity Reports.”

Meanwhile, third-party doctrine allows the government to access financial data without warrants, and the SEC’s Consolidated Audit Trail (CAT) tracks every investor’s trading activity without suspicion of wrongdoing.

Privacy-protecting crypto technologies such as zero-knowledge proofs, mixers, and privacy pools can reduce reliance on intermediaries while DeFi protocols offer transparent, equal access without discrimination, she said.

“A bank that might not want to lend to certain types of people gives way to a DeFi protocol through which everybody can borrow on the same, publicly transparent terms.”

Peirce made several policy recommendations to protect Americans’ right to self-custody crypto assets, not to prosecute open-source privacy software developers, and to avoid requiring intermediaries in peer-to-peer transactions.

“We should not ask peers transacting with one another, where no intermediary exists, to collect and report information on each other. Doing so would deputize us to surveil our neighbors—a practice antithetical to a free society.”

SEC Launches ‘Project Crypto’

“We will make sure the next chapter of financial innovation is written right here in America,” SEC chair Paul Atkins said on Monday.

The comments came as Atkins unveiled ‘Project Crypto,’ a broad initiative to modernize the country’s outdated securities rules “to enable America’s financial markets to move on-chain.”

Atkins said the SEC will review and potentially repeal “outdated rules” that are no longer applicable to the crypto sector, in order to support the development of tokenized assets and emerging financial models.

Meanwhile, the White House is also preparing an executive order that will punish banks that block crypto investors and companies, reversing Biden-era discrimination.