Jill Gunter

Blockchain Privacy Tools Offer New Safeguard for Liberty

Below, I share the comments I made yesterday at the SEC for their Roundtable on Financial Surveillance and Privacy. https://www.sec.gov/newsroom/press-releases/2025-138-sec-announces-agenda-panelists-roundtable-financial-surveillance-privacy Thank you Chairman, Commissioners, SEC Staff Members, my fellow industry representatives, and all others in attendance and tuned in — thank you for the opportunity to talk to you today about one of the greatest opportunities that stands before us to improve how we safeguard our values, liberties, and nation. My name is Jill Gunter. I have worked in the cryptocurrency and digital assets industry for the past ten years as a researcher, an investor, and an entrepreneur. I founded and run a company called Espresso Systems that builds the tools necessary to migrate mainstream financial services to more efficient, safer, and more global infrastructure on blockchains. I have built privacy tools for end users and institutions. I have been a user and beneficiary of privacy tools in my activity as a user. Last week, I had a new experience. I was subject to a hack of my wallet, and watched as $30,000 of stablecoins was drained to a privacy product. I have been in the industry for 10 years and have never been hacked. There was a vulnerability in a smart contract that I had allowed to access my wallet months prior, and it was exploited to move funds without my consent, ultimately moving them into a privacy protocol to effectively be laundered. I wondered if I should share this experience today. The hack ironically occurred whilst I was drafting this talk. I think it’s important to begin by acknowledging, however, that the broad category of privacy tools can and are frequently abused. Yet I want to convince you today that privacy is worth defending; that privacy is a pragmatic need; and that blockchain rails support privacy products that do a better job of meeting compliance needs and protecting users than those products and systems that have existed to date. Indeed, the fact that this next generation of products and services can meet compliance goals with less data collection, and less exposure of data, is (I would argue) the MOST compelling reason to adopt blockchains and migrate to digital assets. To date, blockchain privacy products have mostly made headlines for the ways they have been abused. This will change over the next decade provided that policymakers embrace the ways this technology will remove tradeoffs and offer step-change improvements over the status quo. Financial Privacy is Worth Defending I want to start with the notion that privacy, and particularly financial privacy, is worth defending. We have never lived in a world without cash – those anonymous bearer assets that are transacted peer-to-peer and naturally protect the privacy of the user. But cash, of course, has shortcomings. More than ever, our lives are lived online, meaning an unprecedented amount of transaction data is being collected on us and, particularly with the advent of consumer AI, is being made both legible and actionable. But we don’t need to jump to George Orwell to understand the value of peer-to-peer private payments. We can look to countries like China, which have implemented financial and social credit scoring based in part on the financial and transaction histories of individuals. We can look to countries with capital controls, like Venezuela, where it is a well-documented phenomenon that these policies have outsized harm on the average person. The elite, the well-connected, and the important institutions in these societies have many means of tunneling around capital controls, while the student, the mother, the small business owner is trapped in a broken system and an inflating currency. Cryptocurrency, in the form of bitcoin or stablecoins, has for some time served as a reprieve. Cryptocurrency offers an escape hatch accessible to anyone with an internet connection – not just those personally well-connected in the oft-corrupt banking or government sectors. In my conversations and through my research, however, I have learned that confidence in this crypto-based workaround is often at-risk due to concerns about its transparent nature. The success of cryptocurrencies in securing civil liberties and as a mechanism for protecting civilians and humanitarian access is manifest from students in Venezuela, to protestors in Canada shut off from their financial accounts, to aid workers in the Ukraine struggling to raise resources in the fog of war. Yet wherever there has been success, it has been accompanied by anxiety about the transparency of the blockchain technology. Fortunately for those whose lives have depended on them, privacy tools for digital assets have been live for the last decade. Privacy is Pragmatic But privacy is not JUST a moral imperative. It’s not solely useful for the protection of civil liberties or as a dissident technology. Privacy is also a practical requirement for the functioning of any financial system. Any individual who has inadvertently left their Venmo transactions public for too long can tell you that privacy is just pragmatic. But you can also see it at the institutional level, in the upper echelons of high finance. I started my career as a bond trader on Wall Street. At the time, all of the traders at these banks used interdealer brokers to trade with their competitors across Wall Street. This meant that I spent a meaningful part of my day picking up the phone, talking to a broker, and working with them to find another bank that would buy or sell the bonds on my book. These brokers helped execute trades with your competitors across Wall Street, sitting between Goldman and JP Morgan or between Deutsche Bank and Nomura. It’s a highly adversarial environment. Your positions are your poker hand, and if your competitors learn what you’ve been dealt, they can use that against you. While a general Wall Street rule of thumb is to trust no one, it can be helpful or even necessary to disclose to your brokers what you are trying to get done that day or that week so they can facilitate finding you a counterparty. Brokers are supposed to treat this knowledge with the utmost discretion. It will not surprise you that sometimes, they don’t. On several occasions I overheard the brokers I worked with, unknowingly still with an open phone line to me, obliquely-yet-obviously identifying me to my competitors. In so many areas of finance, whether at the individual level or the institutional level, we depend on middlemen to facilitate transactions and trades. These middlemen become privy to all kinds of data that they aren’t always equipped or incentivized to protect. Blockchains obviate middlemen in digital assets transactions – removing brokers by allowing counterparties to interact directly, and reducing clearing and settlement processes to computer programs run by nodes around the world. But blockchains also enable new classes of technology that can support fresh paradigms around dynamics of identity and data disclosure. Through state-of-the art implementations of cryptographic tools like zero-knowledge proofs and multiparty computation, we can prove all manner of things about ourselves or our portfolios without handing over credentials. We can prove that we are over the age of 21, according to our State Department-issued passport, without ever showing the passport itself. A bank can prove to the world that it meets its reserve requirement without publicly disclosing the details of its audit. A trading counterparty can prove that they aren’t creating a wrong-way risk exposure without revealing the identity of the institution. A fund manager can prove in real-time that the assets in the portfolio meet the fund’s mandate without compromising their competitive edge and disclosing the precise securities it holds. The only dynamics holding us back from this future are (1) getting the world’s assets onto digital rails and (2) embrace of the technology by our global systems of governance, from policymakers to banking executives. I recall when I first started working on Wall Street, a few years after the 2008 financial crisis, hearing from colleagues that all of the major banks were still sifting through the legacy counterparty exposure they had to Lehman Brothers. Working in the wake of the Great Financial Crisis, drove home to me the importance of understanding counterparty exposure and risk limits. But I was blown away by the challenges of calculating these accurately in real-time. The bottleneck was partly technological – with each institution running its own database with largely manual, human-led end of day reconciliation processes. And it was partly due to the incentives of the institutions to maintain privacy over proprietary strategies and positions. Blockchains, because they are largely transparent today, have exhibited no such issues. For all of the price volatility and, yes, sometimes crises that blockchains have borne witness to, all liquidations in the decentralized finance universe have consistently been orderly due to the fact that risk in the system can be witnessed (and dealt with) in real-time. This does not need to change when you introduce privacy tools into the systems. Even when identities or amounts are obfuscated, encrypted computation and zero-knowledge proofs can still support real-time audits. Onchain Privacy Products Improve on the Status Quo The privacy products pioneered by the cryptocurrency and digital assets industry provide us with the tools to solve these large-scale problems that have long plagued the global economy. My company, Espresso, invented and piloted a privacy product that allows for selective disclosure of information, configurable by the asset issuer. You are about to hear from the founder of Zcash, the project that invented onchain privacy a decade ago and has driven much of the product innovation to balance privacy and user empowerment with compatibility with compliance demands by third party service providers like exchanges and custodians. Projects like Aztec and World and Self are driving real-world adoption of verifiable digital identification and credentials, with ever-increasing importance in a world rife with data breaches and with bots. 0xbow, with its Privacy Pools product, has developed a pragmatic approach to offer on-chain privacy to legitimate users while excluding illicit actors. I could go on. But I will cede my time to let the other builders in this room speak for themselves. I have been a builder, and a user of privacy products in crypto. As of last week, you could also say that I have been a victim of a black hat who made off with my funds behind the shield of a privacy protocol. It would be easy for me to feel disillusioned with the way privacy is abused in my industry, but I do not feel this way. Instead, I feel more conviction than ever that the great work being done by the founders, inventors, and advocates we are surrounded by today will protect users, enable fair financial markets, and meet risk-management goals better than we do today – both in crypto and in the context of the broader global economy.