As the trial of Tornado Cash co-founder Roman Storm approaches a verdict, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has spoken out in strong defence of transaction privacy and the rights of developers. Her comments were made during a speech at the Science of Blockchain Conference and come at a pivotal time for the future of open-source crypto tools and digital privacy.
Peirce warned against treating developers as criminals for creating software that can be misused, arguing that such a stance would slow innovation and harm fundamental freedoms.
Developers Shouldn’t Be Held Responsible
Hester Peirce made it clear that developers of open-source privacy software should not be held liable for how others use their code. Referring to Roman Storm’s ongoing legal battle, she said that developers are not intermediaries in transactions and shouldn’t be treated as such.
“We should take concrete steps to protect people’s ability not only to communicate privately, but to transfer value privately, as they could have done with physical coins in the days in which the Fourth Amendment was crafted,” she stated.
She stressed that immutable, open-source protocols are public tools by design and cannot be forced to comply with surveillance laws in the same way centralized platforms can.
Privacy Is Essential, Not Optional
Peirce highlighted that the ability to transact privately is as important as the right to communicate privately. Her argument drew parallels with the 1990s when governments tried to prevent private use of strong encryption technologies. She credited cryptographers like Phil Zimmermann, who created Pretty Good Privacy (PGP), for pushing back and helping society realise the long-term benefits of allowing cryptography to thrive.
“The internet could not have succeeded without strong cryptography,” she said. “Because of their hard-fought victory, we rely on encryption daily to bank, shop, email, and talk securely.”
Peirce warned that applying heavy surveillance to financial technology today would repeat the mistakes of the past and could stall the progress of decentralized finance (DeFi) and digital privacy tools.
Tornado Cash and the Trial of Roman Storm
Roman Storm, co-founder of Tornado Cash, is on trial in the Southern District of New York, accused of enabling money laundering through the crypto mixing service. Tornado Cash allows users to hide the source and destination of cryptocurrency transactions, a feature that authorities claim has been used by criminals.
If convicted, Storm could face up to 40 years in prison. His defence and much of the crypto community argue that the service is a neutral tool, comparable to a knife or internet browser, that can be used for both legal and illegal purposes.
The debate is particularly sensitive as another mixing service, Samourai Wallet, recently saw its co-founders plead guilty to similar charges. That decision followed a failed attempt to dismiss the case.
DeFi Broker Rule and the Risks of Overregulation
Peirce also criticised the now-defeated DeFi broker rule, which the Biden administration had tried to push forward. The rule would have required DeFi platforms to collect and report information on users’ crypto sales and transactions to the IRS.
“This would deputize us to surveil our neighbours, a practice antithetical to a free society,” she said.
Peirce argued that forcing intermediaries into peer-to-peer transactions undermines the core principles of blockchain technology. She warned that regulating DeFi with the same tools used for traditional finance ignores the unique and open nature of these protocols.
She believes that, as with the internet, the benefits of allowing permissionless innovation far outweigh the risks posed by misuse.
Commissioner Peirce’s comments are some of the strongest yet from a U.S. regulator in defence of crypto privacy. As legal pressure mounts on developers of mixing services, her remarks underline a growing divide between those advocating for technological freedom and those pushing for tighter financial oversight.
