Peirce Say Make KYC No Dey Collect Too Much Data as Midnight Dey Build ZK Tools

Hester Peirce call for review of financial identity checks during her September 23 speech. She talk say verifiable credentials and zero-knowledge proofs fit confirm facts about one customer while dem limit access to the data wey dey underneath. Charles Hoskinson respond to coverage of her remarks with the phrase “Smart Compliance,” to draw attention to approach wey Midnight dey develop inside the Cardano ecosystem.

Peirce Dey Target Repeated KYC Checks

Under current customer identification rules, financial institutions dey generally collect and verify information like client name, date of birth, address and identification number. Peirce ask why several institutions suppose keep their own copy of those records when one trusted entity don already complete the check.

She propose narrower form of verification. One institution fit only need to know whether person meet age requirement, qualify as accredited investor or don pass another eligibility check. Verifiable credential fit attest to that fact, and zero-knowledge proof fit confirm am without disclosing the information wey dem use to establish am.

Peirce call for rules wey go make am easier for regulated firms to rely on identity verification wey trusted third parties don perform. She make am clear say the speech na her personal views, no be SEC decision.

Midnight Dey Develop Private Identity Tools

Midnight na separate partner blockchain inside the Cardano ecosystem. The design allow applications use private information to generate proof say one condition don dey met without putting the underlying data on public ledger.

Teams inside the ecosystem dey apply that model to identity. Midnames dey develop verifiable credentials wey fit disclose one specific attribute instead of entire document. Triple Play dey work on checks for attributes including age, nationality and KYC status. These products still dey under development; dem never present them as replacements for the checks wey US financial institutions must currently perform.

Hoskinson “Smart Compliance” comment point out the overlap between Peirce examples and Midnight intended use cases. Peirce no mention Midnight or Cardano for her speech.

US Identity Rules Still Be Separate Hurdle

Cryptographic proof fit establish say application condition don dey met. E no fit, on its own, authorize regulated institution to change how dem identify customers. Peirce talk say technology to limit disclosure dey, but rules wey govern collection of customer information and reliance on third-party checks need further examination.

That difference define the current position for Midnight identity tools. One application fit keep supporting documents offchain and reveal only the required result. US financial institution go still need legally accepted way to rely on that result when dem dey fulfill customer identification duties. Peirce speech put the repeated collection of the same records under scrutiny; e no remove that requirement.