The SEC’s Crypto Process Drive scheduled a four-hour roundtable on monetary surveillance and privateness for Dec. 15, bringing collectively zero-knowledge proof builders, civil liberties advocates, and protocol executives to debate whether or not blockchain privateness instruments can coexist with anti-money laundering enforcement.
The timing is deliberate. Two months in the past, the co-founders of Samourai Pockets obtained five- and four-year jail sentences for working what prosecutors referred to as an unlicensed cash transmitter that facilitated $237 million in unlawful transactions.
Three months earlier than that, a jury convicted Twister Money developer Roman Storm on unlicensed money-transmitting expenses however deadlocked on money-laundering conspiracy and acquitted him on sanctions violations.
FinCEN’s proposed Part 311 rule concentrating on worldwide cryptocurrency mixing as a “class of transactions of main cash laundering concern” stays unfinished, with its remark interval closed since January 2024 and its remaining textual content anticipated in 2025.
Commissioner Hester Peirce, who leads the duty pressure, framed the occasion as an opportunity to “recalibrate monetary surveillance measures to make sure the safety of our nation and the liberties that make America distinctive.”
The panel listing reads like a blueprint for what that recalibration may appear like: Zcash founder Zooko Wilcox, Aleo CEO Koh, Espresso Methods CSO Jill Gunter, and SpruceID founder Wayne Chang symbolize the zero-knowledge and privacy-preserving computation camp.
Summer season Mersinger from the Blockchain Affiliation and J.W. Verret from George Mason Regulation College carry the coverage and authorized framing.
ACLU senior coverage analyst Jay Stanley represents the civil liberties perspective that has traditionally handled monetary surveillance as a Fourth Modification stress level.
The three-level squeeze on privateness instruments defines the backdrop. Samourai’s sentences present the harshest operational-liability consequence for wallet-linked mixing: co-founders Keonne Rodriguez and William Lonergan Hill pleaded responsible, and Decide Denise Cote sentenced them in November 2025.
The DOJ handled Samourai as a mixer that enabled darknet markets, cyber intrusions, and transactions tied to sanctioned jurisdictions.
The idea is: if a software program facilitates monetary privateness and somebody operates it as a service, they run an unlicensed money-transmitting enterprise.
The Storm verdict attracts a narrower line. The jury convicted him on the unlicensed transmitter conspiracy however deadlocked on the extra severe money-laundering cost and acquitted him on sanctions-related conspiracy.
Prosecutors argued that Twister Money enabled over $1 billion in unlawful transactions, together with flows tied to North Korea-linked actors. Nonetheless, the jury confirmed better consolation with punishing “cash transmission” theories than with affirming the total “developer equals launderer” leap.
FinCEN’s Part 311 proposal is the regulatory overhang that makes the SEC roundtable really feel coordinated with a broader federal posture.
The company issued the discover of proposed rulemaking in October 2023, figuring out worldwide cryptocurrency mixing as a money-laundering concern and proposing enhanced recordkeeping and reporting necessities for coated monetary establishments after they know, suspect, or have cause to suspect a transaction entails such mixing.
Authorized analyses on the time famous how uncommon it was for FinCEN to make use of Part 311 to focus on an exercise class quite than a selected establishment or jurisdiction.
The remark interval led to January 2024. A Unified Agenda entry indicated motion towards a remaining rule stage with a 2025 window.
As of early December 2025, FinCEN’s Particular Measures listing nonetheless exhibits the cryptocurrency mixing motion as anchored to the 2023 discovering, and not using a listed final-rule hyperlink, indicating the rule has not been finalized.
The hole between the NPRM and the ultimate rule creates uncertainty about how aggressively FinCEN will institutionalize surveillance expectations for mixer-linked flows.
The privacy-preserving computation guess
The panelists symbolize a technical thesis: that zero-knowledge proofs, homomorphic encryption, and programmable privateness can fulfill compliance necessities with out exposing transaction graphs to blanket surveillance.
Aleo, Espresso, Zcash, and comparable initiatives construct methods that enable customers to show they meet regulatory thresholds, are non-sanctioned counterparty, have complied with tax reporting necessities, and are accredited traders, with out disclosing the total transaction historical past.
The idea assumes regulators will settle for selective disclosure backed by cryptographic proof quite than requiring full ledger visibility because the default.
SpruceID’s Wayne Chang brings a complementary angle: decentralized identification methods that allow customers management attestations about compliance standing with out counting on centralized intermediaries.
The counterargument, implicit within the Samourai and Storm prosecutions, is that privacy-by-default architectures obscure enforcement sight traces an excessive amount of.
Prosecutors argued that Twister Money and Samourai enabled unhealthy actors exactly as a result of the instruments didn’t distinguish between professional privateness use circumstances and felony obfuscation.
The DOJ’s place treats privateness instruments as infrastructure that should be designed with regulation enforcement entry inbuilt, not bolted on.
That framing collapses the excellence between “device” and “service” and treats builders who deploy privacy-preserving code as operators of monetary companies topic to Financial institution Secrecy Act obligations.
What the SEC good points from this dialog
The roundtable provides the SEC a public file on whether or not privacy-preserving expertise can meet securities regulation obligations.
The fee doesn’t regulate mixing immediately; that’s, FinCEN and DOJ territory. Nonetheless, it governs the issuance, buying and selling, and custody of digital property that may very well be structured with privateness options.
If a tokenized safety makes use of zero-knowledge proofs to cover transaction particulars, does that violate broker-dealer reporting necessities?
Can another buying and selling system use privacy-preserving computation to match orders with out disclosing pre-trade info to rivals whereas nonetheless assembly Regulation ATS transparency guidelines?
The roundtable panelists will doubtlessly reply these questions reside, on the file, with Chairman Paul Atkins and Commissioners Mark Uyeda and Hester Peirce current.
The timing additionally lets the SEC place itself relative to FinCEN.
If FinCEN finalizes the Part 311 mixer rule with broad restrictions, the SEC can level to its December roundtable as proof that it explored whether or not expertise may remedy the compliance downside earlier than defaulting to prohibition.
Alternatively, if FinCEN softens the rule or delays it additional, the SEC’s roundtable turns into a sign that the administration is open to privacy-preserving options that meet regulation enforcement wants.
Both approach, the occasion builds a file that lets the SEC declare it consulted technologists, civil libertarians, and trade earlier than deciding how you can deal with privateness in digital asset regulation.
The SEC now decides how a lot weight to present privacy-preserving computation in its personal rulemaking.
If the roundtable reaches consensus that zero-knowledge proofs can meet compliance obligations, the fee can incorporate that flexibility into broker-dealer, ATS, and custody guidelines for digital property.
If the roundtable fractures into “privateness is a proper” versus “privateness allows crime” camps, the SEC defaults to present surveillance-heavy frameworks and leaves privateness advocates to litigate in courtroom.The Samourai sentences and the Storm verdict, for now, have already outlined the boundaries of felony legal responsibility.
The Dec. 15 roundtable decides whether or not there’s area inside these boundaries for privacy-preserving expertise to exist in any respect.
