SEC’s Paul Atkins Demands Government Limits on Crypto Surveillance Powers

Former SEC Commissioner Paul Atkins just fired a shot across the bow—arguing regulators need their crypto surveillance capabilities reined in.

The Push for Digital Privacy

Atkins isn't calling for a free-for-all. His stance highlights a growing tension: how to monitor financial activity without building a panopticon. He suggests current proposals grant too much power, risking the very innovation regulators claim to protect.

It's a classic Washington dance—demand oversight tools, then debate their limits. For crypto natives, it's a familiar refrain: watch the watchmen. After all, traditional finance has its own surveillance gaps, often papered over with compliance theater and hefty consultant fees.

The bottom line? The debate over crypto surveillance isn't just about tracking transactions—it's a fight for the soul of the financial system's future. Will it be open, or endlessly observed?

TLDR

• SEC Chairman Paul Atkins warned that crypto technology could become the most powerful financial surveillance tool ever created if not properly regulated
• The SEC held its sixth crypto roundtable on Monday, focusing on privacy and surveillance issues in digital assets
• Atkins argued government policies should limit bulk surveillance of lawful financial transactions while still protecting against illicit finance
• SEC Commissioner Hester Peirce stated that protecting privacy should be the norm and not an indicator of criminal intent
• The discussion comes as the Trump administration withdraws from cases against privacy tools like Tornado Cash, whose creator Roman Storm was convicted in August

SEC Chairman Paul Atkins issued a warning Monday about the potential for cryptocurrency technology to enable unprecedented government surveillance of citizens’ financial activities. Speaking at the agency’s sixth crypto-related roundtable, Atkins emphasized the need for formal policies to prevent abuse of the transparent nature of blockchain technology.

SEC WARNS crypto COULD BECOME A MASSIVE SPY TOOL

SEC Chair Paul Atkins says blockchain tech could turn into the most powerful financial surveillance system ever.

But he believes there is a way to regulate crypto that stops crime without stripping away people’s privacy. pic.twitter.com/uwgnv2kbUd

— Coin Bureau (@coinbureau) December 16, 2025

The roundtable focused specifically on privacy and surveillance issues within the digital asset sector. Atkins cautioned that without proper guardrails, blockchain’s ability to LINK transactions to individual users could be exploited for mass monitoring.

“If the instinct of the government is to treat every wallet like a broker, every piece of software as an exchange, every transaction as a reportable event, and every protocol as a convenient surveillance node, then the government will transform this ecosystem into a financial panopticon,” Atkins said. He referenced the concept of a constant-observation prison designed by an English philosopher.

The chairman pointed to existing surveillance tools that have raised privacy concerns. He mentioned the consolidated audit trail technology used to monitor U.S. markets and post-2008 financial crisis reporting requirements. Atkins suggested these tools have expanded beyond their original scope.

Privacy Protection Standards

Despite his warnings, Atkins expressed confidence that a balance between innovation and privacy protection is achievable. He stated that the crypto industry is capable of designing systems that screen for illicit finance while preserving user privacy.

SEC Commissioner Hester Peirce echoed these concerns during the roundtable. She leads the agency’s crypto task force and argued that privacy protection should be considered normal rather than suspicious. Peirce said the government should avoid imposing Bank Secrecy Act obligations on software developers who don’t have custody of user assets.

The privacy debate has intersected with recent criminal cases. In August, Tornado Cash creator Roman Storm was found guilty on money transmitting charges. Tornado Cash is a decentralized mixing service designed to provide transaction privacy for users.

Regulatory Shift Under Trump

The TRUMP administration has signaled a different approach to crypto regulation. Acting Assistant Attorney General Matthew Galeotti stated in August that writing code is not a crime. This represents a shift from previous enforcement actions against privacy tool developers.

Atkins has emphasized close coordination with the Commodity Futures Trading Commission on crypto oversight. His approach differs from former SEC Chairman Gary Gensler, as Atkins argues most digital assets are not securities and fall outside the SEC’s jurisdiction.

The SEC’s Project Crypto initiative is moving forward on several fronts. These include defining crypto securities, establishing tokenization standards, and creating an innovation exemption for testing new products. The agency plans to propose new rules for regulating its portion of the digital asset industry.

Peirce referenced the Fourth Amendment in her remarks, which protects against unreasonable government searches. She called on the government to guard people’s right to live private lives. The debate over financial privacy continues as traditional finance companies enter the crypto space.