SEC Commissioner Hester Peirce has made a strong case for protecting financial privacy and the rights of crypto developers, stating that building privacy-focused tools shouldn’t be criminalized. Her comments come as the Tornado Cash trial moves toward a pivotal verdict.
Speaking at the Science of Blockchain Conference, Peirce warned that punishing open-source developers for how their code is used by others undermines basic freedoms.
“People should be able not only to communicate privately but also to transfer value privately,” she said, likening this right to the era when physical cash ensured privacy.
Tornado Cash on Trial, Developers Under Fire
The case against Roman Storm, co-founder of Tornado Cash, has become a flashpoint in the debate over crypto privacy. The mixing protocol, designed to obscure the source and destination of transactions, is under scrutiny for allegedly being used by criminals to launder funds.
Storm faces up to 40 years in prison if convicted. His defense — and much of the Web3 community — argues that Tornado Cash is merely a tool and that its creators cannot control how people use it.
The trial has parallels to other ongoing investigations, including the recent guilty plea from Samourai Wallet’s co-founders, also charged for operating a crypto mixing service.
Peirce: Encryption Powers Progress, Not Crime
Drawing parallels to the 1990s crypto wars, Peirce referenced how developers like Phil Zimmermann, who created Pretty Good Privacy (PGP), fought to keep strong encryption accessible. That fight, she said, enabled today’s internet economy.
“The internet could not have succeeded without strong cryptography,” she emphasized, cautioning that stifling privacy innovation today may have long-term negative effects.
Opposing the DeFi Broker Rule
Peirce also voiced opposition to the now-defunct DeFi broker rule, which would have required decentralized platforms to report user transaction data to the IRS. The proposal, scrapped in April, was seen as a backdoor to mass financial surveillance.
“Requiring intermediaries in peer-to-peer crypto transfers would make us agents of surveillance — a dangerous precedent for a free society,” Peirce said.
What’s Next?
As the Tornado Cash verdict looms, the crypto community watches closely. The outcome could set a legal precedent for how developers of decentralized protocols are treated in the U.S.
Peirce’s speech underscores the growing tension between regulatory enforcement and technological liberty — a battle that could define the next decade of Web3.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.