Peirce Pushes Slimmer Crypto KYC with Verifiable Credentials
SEC Commissioner Hester Peirce has proposed a new approach to Know Your Customer (KYC) regulations for digital asset platforms. Her idea is to verify customers' compliance with legal requirements without storing their complete identity files.
The scheme relies on verifiable credentials and zero-knowledge proofs, which allow trusted issuers like government agencies or regulated institutions to confirm clients' details without exposing the original documents. This means that when a platform requests KYC verification, it receives only the relevant information, such as 'compliant', 'confirmed', or 'approved', without accessing sensitive data.
The proposal does not eliminate identity verification, but rather redistributes where personal information resides. The original issuer still needs reliable evidence, and the platform remains responsible for ensuring that the verification was carried out rigorously.