A regulator’s radical defense of privacy

Centralized stablecoins, permissioned blockchains, corporate treasury companies…the hottest topics in crypto are not very cypherpunk these days.

Weirdly though, the SEC is.

In a speech last week, SEC Commissioner Hester Peirce delivered a defense of privacy that wouldn’t be out of place on the original cypherpunk mailing list.

She even cited Eric Hughes, founder of the mailing list and author of A Cypherpunk Manifesto, as an inspiration for her surprisingly radical line of thinking.

Hughes probably never imagined he’d be approvingly quoted by a government official, as you can tell from the line Peirce chose to quote: “We cannot expect governments, corporations or other large, faceless organizations to grant us privacy out of their beneficence.”

And yet, here is one of the US’s most influential regulators not just name-dropping Hughes, but amplifying his radical views on privacy-preserving technology.

She hardly sounds like someone who works for the government, though: “Where, by design or deficiency, the law will not protect us, technology might.” 

That’s a pretty good summation of Hughes’ core message that, because we trust governments to grant it, “privacy in an open society requires cryptography.”

Writing in 1993, Hughes spoke aspirationally about the need for “systems which allow anonymous transactions to take place.”

Writing in 2025, Peirce cites crypto mixers, privacy-preserving blockchains and even decentralized physical networks (DePIN!!!) as systems that can provide such anonymity.

She makes the case for these technologies succinctly: “New and improved technology can diminish the need for us to rely on third parties and thus to hand our information over to them.” 

Peirce even makes explicit what Hughes diplomatically left unsaid in the Manifesto: Privacy preserving technology must be allowed “even though doing so enables people to use them for bad purposes.”

What could be more cypherpunk than that?

It’s an extraordinary turn of events to see an SEC commissioner being so closely aligned with the author of the original cypherpunk’s call to arms on privacy.

Their views are not entirely aligned, however — but in the opposite way you might expect.

Much of Peirce’s speech targets the “third-party doctrine” — the legal theory that lets law enforcement access your banking data without a warrant — which she accuses the US government (her employer!) of wielding like a “sledgehammer.”

“The third-party doctrine is a key pillar of financial surveillance in this country,” she writes, before making clear that she’d like to knock it down.

In short, she argues that your banking records deserve the same Fourth Amendment protection as whatever goes on in your home behind closed doors.

Weirdly, I think Hughes might disagree.

“If two parties have some sort of dealings,” he wrote in the Manifesto, “then each has a memory of their interaction. Each party can speak about their own memory of this; how could anyone prevent it?”

That is a tidy restatement of the government’s insistence that once you give your information to a third party, such as a bank, it’s no longer your private information.

Hughes even adds that “we seek not to restrict any speech at all” — which must therefore include banks speaking about their customers.

(Wouldn’t it be funny if the prosecution cited Hughes in the next Roman Storm trial.)

But this is why both Peirce and Hughes put their faith in technology: Even if the current government chooses to respect your privacy, the next one probably won’t.

“We must come together and create systems which allow anonymous transactions to take place,” Hughes wrote.

But not just that.

“For privacy to be widespread it must be part of a social contract,” he added. “Privacy only extends so far as the cooperation of one's fellows in society.”

This will be a hard sell, I think.

Most people say they are in favor of privacy. But most people also say they’re against money laundering and terrorist financing.

Few are as radical as Peirce and Hughes in believing that privacy is so fundamental that its benefits outweigh any harm it might enable (or fail to prevent).

If Peirce’s speech finds its way to Hughes (wherever he is), I’m sure he’d recognize and appreciate it as an effort to win the not-yet-radicalized over to the cause.

“We the Cypherpunks seek your questions and your concerns and hope we may engage you,” he wrote in 1993.

Hester Peirce can count herself among the “we.”

— Byron Gilliam

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