TL;DR
- SEC Chair warns crypto could become total financial surveillance panopticon.
- Advocates balanced rules protecting both national security and personal privacy.
- Tornado Cash case highlights ongoing legal battle over privacy tools.
SEC Chair Paul Atkins said on Monday, December 15, that public blockchains excel at linking transactions to senders, a feature that supports traceability but also raises direct questions about personal privacy.
Atkins told attendees at the SEC Crypto Task Force’s sixth roundtable that a workable path exists to address national security needs without stripping individuals of privacy. However, he cautioned that heavy-handed government involvement can push policy into invasive territory.
Atkins framed the risk in plain terms. He said crypto can become the most powerful financial surveillance architecture ever built if regulators treat every wallet as a broker, treat every piece of software as an exchange, and treat every transaction as a reportable event.
Atkins argued that a government instinct to force intermediation can turn onchain infrastructure into a permanent monitoring grid. He used the image of a financial panopticon to describe a system where visibility becomes total by design.
“Indeed, if the instinct of the government is to treat every wallet like a broker, every piece of software as an exchange, every transaction as a reportable event, and every protocol as a convenient surveillance node, then the government will transform this ecosystem into a financial panopticon,” Atkins said.
At the same time, Atkins said regulators can design rules that protect personal freedoms while applying clear standards to blockchain-based activity. He presented the goal as balance: protect security concerns and preserve privacy as a default condition rather than a privilege granted by the state.
“Together, I am confident that we can shape a framework that ensures that neither technological nor financial advancements will come at the expense of personal freedoms,” Atkins said.
Privacy debates expand beyond the SEC as criminal cases add pressure
Privacy has become a central theme for regulators as traditional finance steps deeper into crypto markets and as compliance expectations collide with open networks. Policymakers now argue over how existing rules should apply to wallets, protocols, and software, without turning routine payments and transfers into a full-time reporting obligation.
The issue has also moved through criminal courts. In August, a jury found Roman Storm, a Tornado Cash creator, guilty on a money transmitting charge. Tornado Cash operates as a decentralized mixing service designed to provide user privacy. After the verdict, crypto advocates rallied behind Storm and pushed for an appeal, turning the case into a broader proxy fight about privacy tools and developer liability.
Signals from the U.S. Department of Justice have also shifted under the Trump administration. In August, Matthew J. Galeotti, the acting assistant attorney general for the Criminal Division, said writing code is not a crime. Even so, the next steps for Storm’s case remain uncertain, and the debate about how prosecutors treat software developers continues.
Other SEC officials also pressed the privacy point. In August, SEC Commissioner Hester Peirce argued for financial privacy in a speech and referenced the Fourth Amendment, which limits unreasonable government searches. On Monday, Peirce reiterated that privacy protection should serve as the norm, not as a marker of wrongdoing. She urged government to resist forcing intermediation simply to create a regulatory foothold or to expand financial surveillance.
Atkins used the roundtable to set a boundary and a direction: crypto provides strong traceability, yet policy choices determine whether that traceability supports lawful enforcement or turns into continuous monitoring. His message was direct—regulators can write rules that respect civil liberties while still addressing legitimate security demands, but only if they avoid treating every onchain action as a trigger for compulsory reporting.
