Hester Peirce defends crypto privacy amid Tornado Cash trial

SEC Commissioner Hester Peirce has reiterated her defense of transaction privacy in the cryptocurrency space, as the high-profile legal case against Tornado Cash approaches its verdict. Speaking at the Science of Blockchain Conference in late June and early July 2025, Peirce emphasized the importance of protecting individuals’ ability to conduct private transactions and self-custody their digital assets without excessive regulatory interference. She argued that privacy-protecting technologies, particularly those based on open-source code, should not be stifled by financial surveillance measures that fail to account for their immutable nature [1].

Peirce pointed to historical parallels, citing how in the 1990s, governments sought to restrict strong cryptography for national security purposes. It was only after sustained advocacy from cryptographers like Phil Zimmermann, the creator of PGP encryption, that public and judicial opinion shifted in favor of private encryption [2]. Drawing from this precedent, Peirce warned against policies that attempt to control the use of decentralized protocols, arguing that such measures are both impractical and harmful to innovation.

Her remarks also addressed the recent DeFi broker rule, which would have required DeFi protocols to disclose transaction details to the IRS. Peirce criticized the rule as an overreach that would deputize everyday users to act as surveillance agents in a peer-to-peer system [3]. She maintained that forcing intermediaries to monitor transactions undermines the very principles of freedom and self-determination that underpin both the internet and the crypto space.

The Tornado Cash case, in which co-founder Roman Storm faces charges related to alleged money laundering, has become a flashpoint in the debate over the regulation of privacy-preserving tools. The defense has argued that the software, like other technologies, can be used for both legitimate and illicit purposes, and that developers should not be held accountable for how users choose to employ their creations [1]. Peirce has long supported this view, stressing that the benefits of open-source innovation outweigh the risks when balanced with reasonable safeguards.

As the case moves toward a verdict, Peirce’s position reflects a broader philosophical divide within the regulatory community. While some advocate for stricter controls to curb criminal activity, Peirce has consistently called for policies that protect user privacy and foster innovation without overreach. Her advocacy underscores the need for a nuanced approach to regulation—one that acknowledges the dual-use nature of many crypto technologies while respecting fundamental liberties.

The outcome of the Tornado Cash case is likely to influence how privacy-focused tools are treated under U.S. law. If the court rules in favor of the prosecution, it could set a precedent that expands regulatory liability for open-source developers. Conversely, a defense victory might reinforce the argument that such tools should remain freely available for all users, regardless of intent. Peirce’s continued support for privacy and decentralization highlights the importance of this case in shaping the future of crypto regulation.

Source: [1] Hester Peirce Defends Crypto Privacy Amid Tornado Cash ... (https://cointelegraph.com/news/hester-peirce-defends-crypto-privacy-tornado-cash-trial)

[2] SEC Commissioner Peirce defends transaction privacy ... (https://www.panewslab.com/en/articles/0d3020f3-f0d6-4624-ba35-b41038eaf6ca)

[3] VELOUSD - SEC's Peirce defends transaction privacy as ... (https://mx.advfn.com/bolsa-de-valores/COIN/VELOUSD/crypto-news/96561191/sec-s-peirce-defends-transaction-privacy-as-torna)