SEC Says Crypto Could Be a “Powerful Financial Surveillance Tool”

US Securities and Exchange Commission (SEC) Chairman Paul Atkins has warned that blockchain and crypto technology could become a powerful surveillance tool if governments get too involved.

Speaking at the SEC Crypto Task Force’s Sixth Crypto Conference round tableAtkins highlighted how blockchains have made it easy to link transactions to senders. He said crypto could eventually “become the most powerful surveillance architecture ever invented.”

The panel focused on financial surveillance and privacy and included representatives from the ZCash privacy token (ZEC), the Blockchain Association, and the Crypto Council for Innovation.

Regulators must rethink how financial transactions are monitored

Atkins mentioned the previous approach taken by former SEC Chairman Gary Gensler, who regulated the crypto industry through enforcement and pushed for every transaction on the blockchain to be reported.

“Indeed, if the government’s instinct is to treat every wallet as a broker, every software as an exchange, every transaction as a reportable event, and every protocol as a convenient surveillance node, then government will transform this ecosystem into a financial panopticon,” Atkins said.

He added, however, that there is still a way to find a balance between innovation and privacy.

“Together, I am confident that we can shape a framework that ensures that neither technological nor financial advancements come at the expense of personal freedoms,” the SEC Chairman said.

Atkins was joined by SEC Commissioner Hester Peirce, who leads the agency’s crypto task force. In his opening statements, Peirce echoed Atkins’ remarks and said now is the time for regulators to “rethink when and how financial transactions are monitored” as the digital asset space grows.

SEC Commissioner Hester Peirce addresses the panel (Source: SECOND)

She then said the rules that embody financial privacy were “overdue for a change,” adding that crypto helps “push a reevaluation.”

“Privacy should be the norm and not an indicator of criminal intent,” Peirce added.

Privacy is raised in criminal cases

Over the years, privacy has been a focal point in criminal cases related to crypto protocols and developers.

In August this year, Roman Storm, developer of Tornado Cash, was found guilty of money laundering. The platform he helped create is a decentralized crypto mixing service designed to provide privacy for its users by hiding transaction details.

🚨BIG!!!

More than 65 crypto organizations are pushing Trump to stop the retrial of Tornado Cash developer Roman Storm and arguing that writing code is not a crime.

It’s not just about a single developer.

This is about whether privacy technology is allowed to exist!! pic.twitter.com/Y7E7YxEXlV

— Kyle Chassé 🐸 (@Kylechasse) November 21, 2025

Since Storm’s verdict, crypto advocates have rallied behind him to appeal.

His case has taken on increased importance as the U.S. Justice Department’s stance toward software developers has changed under Donald Trump’s administration. The same month that Storm was convicted, Matthew J Galeotti, acting assistant attorney general for the Justice Department’s criminal division, said in a statement that “writing code” was not a crime.

The crypto community is also rallying behind the co-founder of another crypto mixing platform, Samourai Wallet. Keonne Rodriguez is expected to begin her five-year sentence this week. At a recent conference, Trump was asked if he would grant Rodriguez a pardon. He responded by saying he would look into the case.

Trump has already pardoned Binance founder Changpeng Zhao and Silk Road developer Ross Ulbricht since entering the White House for a second term.

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