Zero-knowledge proofs could replace centralized KYC data collection

The SEC published FAQs on September 25 clarifying how federal securities laws apply to crypto assets and related transactions. The guidance gives functional networks a clearer route, but it reflects staff views and has no legal force.

• Buybacks on functional networks generally do not create essential managerial efforts
• Liquid-staking receipt tokens can qualify as digital commodities rather than securities

Commissioner Hester Peirce is also challenging mass KYC data collection, warning that centralized databases expose users to hacks, phishing, leaks, and physical attacks. Her proposal uses zero-knowledge proofs to verify compliance without revealing a user's name, income, or address.