Fundamental Financial Privacy Rights Should Be Restored, Says Hester Peirce
In the realm of financial privacy, the current stance of the U.S. Congress is cautious and somewhat divided, particularly in the context of the Bank Secrecy Act (BSA) and the surge of cryptocurrency. This situation has sparked a significant debate, with voices such as SEC Commissioner Hester Peirce advocating for enhanced financial privacy protections that align more closely with Fourth Amendment principles.
The BSA, enacted in 1970, requires financial institutions to report various transactions to the government without a warrant, relying on the "third-party doctrine." This doctrine asserts that information voluntarily given to third parties (like banks) is not protected by the Fourth Amendment against government search and seizure. The Supreme Court upheld this doctrine in cases during the 1970s, despite dissent arguing for stronger privacy protections against broad government surveillance of financial records.
New technologies, such as cryptocurrencies, challenge the existing regime because they reduce reliance on traditional financial intermediaries. This undermines the third-party doctrine's basis and forces Congress to reconsider how financial privacy is protected, as crypto users may transact peer-to-peer without intermediaries who report to the government. This technological evolution is sparking debate on whether laws like the BSA need reform to prevent unwarranted surveillance of individuals' financial behavior.
Legislative efforts, such as the Anti-CBDC Surveillance State Act (H.R. 1919), passed by the House in July 2025, reflect concerns about government overreach in financial surveillance, especially with respect to digital currencies issued by the Federal Reserve. The act seeks to prevent the issuance of a central bank digital currency (CBDC) feared as a tool for broad government financial surveillance, emphasizing constitutional Fourth Amendment privacy protections.
The President’s Working Group (PWG) on financial markets has offered mixed recommendations. Some proposals suggest expanding reporting requirements under 26 U.S.C. § 6050I, which critics argue would increase warrantless surveillance of peer-to-peer transactions, contrary to privacy interests. However, alternatives to repeal or harmonize such provisions with the BSA to reduce privacy violations are also discussed.
SEC Commissioner Peirce and others in regulatory circles are calling for reconsideration of the third-party doctrine’s role and for policy reforms that balance anti-money laundering goals with preserving individual liberties and privacy. Addressing the imbalance in the BSA regime might be the single most important way to promote U.S. leadership in digital assets and financial technology.
In summary, while there is significant recognition in Congress and among regulators of the privacy challenges posed by the BSA and the advent of cryptocurrencies, the approach largely involves debate and incremental legislative proposals rather than wholesale restoration of Fourth Amendment financial privacy rights. Notably, legislation aimed at banning a surveillant CBDC points to a privacy-conscious trend in Congress, yet reforms directly repealing or replacing BSA provisions like the 6050I amendment remain under discussion, not enacted. Proponents argue that technology and updated law should restore meaningful financial privacy that current doctrine and laws have diminished.
[1] Electronic Frontier Foundation. (2022). The Bank Secrecy Act and Financial Privacy. Retrieved from https://www.eff.org/issues/bank-secrecy-act
[2] Peirce, Hester M. (2021). The Bank Secrecy Act, Financial Privacy, and the Fourth Amendment. Speech delivered at the Cato Institute.
[3] Coin Center. (2021). The Case for Cryptocurrency Privacy. Retrieved from https://coincenter.org/resource/the-case-for-cryptocurrency-privacy/
[4] Congressional Research Service. (2022). Central Bank Digital Currencies: Privacy and Surveillance Concerns. Retrieved from https://crsreports.congress.gov/product/pdf/R/R46844
[5] President’s Working Group on Financial Markets. (2021). Report on Stablecoins. Retrieved from https://www.treasury.gov/resource-center/international/economic-sanctions/Documents/20210715_PWG_Stablecoins_Report.pdf
- In her speech at the Cato Institute, SEC Commissioner Hester Peirce has advocated for financial privacy protections that align more closely with Fourth Amendment principles, particularly in the context of the Bank Secrecy Act (BSA) and the surge of cryptocurrency, believing that enhanced protections would better preserve individual liberties and privacy in the realm of business and finance, under the scrutiny of politics and general news.
- The Anti-CBDC Surveillance State Act, passed by the House in July 2025, is a legislative effort that reflects concerns about government overreach in financial surveillance, especially with respect to digital currencies. This act seeks to prevent the issuance of a central bank digital currency feared as a tool for broad government financial surveillance, emphasizing constitutional Fourth Amendment privacy protections in line with the financial privacy rights debate, mainly in the context of the business and political sector.
