Speaking at the Crypto Task Force Roundtable, Paul Atkins also cautioned that complete financial transparency could damage market structure rather than improve it.
- SEC Chair Paul Atiks noted that public blockchains and analytics tools already allow many transactions to be linked to real-world identities.
- He warned that full real-time transparency could encourage front-running and destabilize market liquidity.
- Privacy-preserving crypto technologies could allow for compliance without mass financial surveillance, he said.
SEC Chair Paul Atkins warned on Monday that crypto risks becoming the “most powerful financial surveillance architecture” ever invented.
Speaking at the Crypto Task Force Roundtable on Financial Surveillance and Privacy, Atkins said the rise of crypto presents a growing challenge for regulators seeking to balance national security objectives with individual financial privacy.
“Pushed in the wrong direction, crypto could become the most powerful financial surveillance architecture ever invented.” – Paul Atkins, Chair, U.S. Securities And Exchange Commission
He noted that public blockchains are already highly transparent, with every transaction recorded on a ledger that anyone can inspect. Combined with increasingly sophisticated blockchain analytics, that transparency often allows on-chain activity to be linked back to real-world identities. This dynamic could lead to a level of financial monitoring far beyond anything seen in traditional markets, Atkins warned.
Total Transparency Could Harm Markets
Atkins also cautioned that complete financial transparency could damage market structure rather than improve it.
He pointed out that institutional investors and market makers rely on a degree of confidentiality to manage risk, build positions, and provide liquidity. He said that if every trade, hedge, or portfolio adjustment were visible in real time, markets could become more vulnerable to front-running, copycat strategies, and sudden liquidity imbalances.
Government Overreach Risk
The SEC chair also turned his critique inward, pointing to the federal government’s expanding use of financial data-collection systems, including the Consolidated Audit Trail, swap data repositories, and Form PF.
“The federal government’s insatiable desire for data has expanded these tools in ways that increasingly put the liberty of American investors at risk,” Atkins said.
Despite the risks, Atkins said crypto also offers tools that could reduce the need for mass financial surveillance rather than expand it. “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.
Retail Wants Privacy Too
His comments come at a time when privacy-focused tokens such as ZCash (ZEC) have captured retail interest as Bitcoin (BTC) and other major tokens are becoming increasingly institutionalized. Zcash allows shielded transactions that keep private information off the public ledger. A report by Galaxy Digital pointed out more than 30% of the Zcash supply is now hidden from the public eye in private pools.
Earlier this year, American investor and entrepreneur Naval Ravikant said if Bitcoin is insurance against fiat, then Zcash is “insurance against Bitcoin.”
Bitcoin’s price was down more than 4% in the last 24 hours, trading at around $85,800. On Stocktwits, retail sentiment around the apex cryptocurrency fell to ‘extremely bearish’ from ‘bearish’ territory over the past day.
Meanwhile, ZEC’s price edged only 0.9% lower in the last 24 hours, trading just under $400. Retail sentiment around the privacy coin trended in ‘extremely bearish’ territory over the past day.
Read also: Gemini Beats Coinbase To Market As Prediction Markets Turn Into Wall Street’s Next Trading Battleground
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