SEC Commissioner Hester Peirce Calls for End to KYC Data Hoarding Ahead of Stablecoin Rules

SEC Commissioner Hester Peirce urged financial firms to stop accumulating customer identity data and to adopt reusable digital credentials that can verify required attributes without repeated collection of personal information.

Why the push for reusable credentials?

Recent breaches at platforms such as Revolut and Coinbase exposed large amounts of identity data collected for KYC and AML compliance. Peirce argues that technology already exists to confirm facts—such as age, citizenship, or sanctions status—without revealing names, addresses, or income, reducing the amount of data that must be stored and shared.

Implications for upcoming stablecoin regulations

The GENIUS Act, which would treat permitted payment stablecoin issuers as financial institutions, requires them to collect and retain customer identification information for five years. While the proposal allows the use of digital credentials and reliance on verification performed by other regulated entities, it does not yet mandate a portable, attribute‑based model.

Regulatory outlook

FinCEN and banking agencies have asked whether final stablecoin rules should incorporate verifiable credentials. They acknowledge that non‑governmental credentials could prove identity without disclosing extra data, but have not included specific provisions in the proposed text. The final rule will determine the extent to which issuers must retain raw documents versus evidence of verification.

Industry response

Coinbase CEO Brian Armstrong highlighted the risk of retaining extensive KYC records, calling for a review of the Bank Secrecy Act and AML requirements. Revolut disclosed that an unauthorized party obtained identity documents after responding to a fraudulent request, though funds were unaffected.

Key considerations

• Adopting attribute‑based credentials could reduce data collection and storage burdens.
• Stablecoin issuers may still need to collect core identifying fields under the GENIUS Act.
• Final regulations will shape whether firms can rely on external verification and retain fewer raw documents.