7 Days Countdown to the SEC Roundtable! The Fate of Privacy Coins, DeFi, and RWA Hangs in the Balance Across Three Major Battlefields

The U.S. Securities and Exchange Commission (SEC) has officially announced that it will hold a “Financial Surveillance and Privacy Rights Roundtable” at its Washington, D.C. headquarters on December 15 from 1:00 pm to 5:00 pm, with the entire event livestreamed online. This meeting will serve as a crucial dialogue between regulators, privacy technology researchers, and market participants. The core objective is to explore how crypto companies collect data and how federal regulation should strike a balance between protecting user privacy and enforcing financial surveillance.

Three Core Topics of the Roundtable: Privacy, DeFi, RWA

The SEC roundtable agenda is meticulously designed, focusing on three major controversial areas. The first battleground is the balance between privacy technology and financial surveillance. Against the backdrop of privacy tools like Tornado Cash and Samourai Wallet facing strict scrutiny over money laundering concerns, the SEC has made it clear that the meeting will focus on how new technologies can recalibrate financial surveillance measures without sacrificing citizens’ privacy rights.

Zero-Knowledge Proofs are at the technical core of this issue. This cryptographic technique allows one party to prove the truth of a statement to another party without revealing any additional information. In financial applications, zero-knowledge proofs can protect user privacy while still satisfying regulatory requirements such as Anti-Money Laundering (AML) and Know Your Customer (KYC). For example, a user can prove they are not on a sanctions list without disclosing specific identity information.

However, regulators remain cautious about such technology. The U.S. Treasury and Department of Justice have repeatedly stated that excessive privacy protections could provide cover for criminal activity. Tornado Cash developers have been prosecuted for allegedly facilitating money laundering, and the outcome of this ongoing case will have far-reaching implications for the entire privacy tech industry. The December 15 roundtable could be the key moment when the SEC clarifies its stance on this issue.

The second battleground is the regulatory classification of decentralized finance (DeFi). Major market maker Citadel Securities argues that the SEC should impose stricter rules on DeFi protocols involving tokenized U.S. stock trading, and should not allow them to circumvent the statutory definitions of “exchange” or “broker-dealer.” This position reflects the anxiety of traditional financial institutions: if DeFi protocols remain unregulated, they could create unfair competition for heavily regulated traditional institutions.

Scott Bauguess, Global Head of Regulatory Policy at the largest U.S. compliant crypto exchange, strongly refutes this, arguing that broker-dealer regulatory obligations should not be imposed on decentralized exchanges (DEX). He emphasizes that DEXs do not control assets like brokers do, and forcibly applying old rules would introduce new risks not present in the current environment; such requirements are “technically infeasible.” The core of this debate is whether decentralized protocols can be treated as traditional financial entities, and how to implement effective regulation without stifling innovation.

The third battleground is the regulatory framework for real-world asset (RWA) tokenization. On December 5, Ondo Finance publicly called on the SEC to establish a compliance pathway for tokenized treasuries and other RWAs, arguing that these assets already comply with existing securities laws and should be allowed to be issued on both permissioned and public blockchains. RWA tokenization refers to making traditional assets like real estate, bonds, and stocks tradable as tokens on blockchains, theoretically reducing transaction costs and increasing liquidity.

Three Major Topics of the SEC Roundtable on December 15

Privacy Technology Regulation: Zero-knowledge proofs, privacy coins (such as Zcash), compliance paths for non-custodial applications

DeFi Regulatory Classification: Should DEXs be considered exchanges or broker-dealers, regulatory rules for tokenized U.S. stocks

RWA Tokenization Rules: Issuance and trading frameworks for tokenized treasuries, real estate, and other traditional assets

Political Maneuvering: Regulatory Shift at the SEC in the Trump Era

The political backdrop of this roundtable is particularly nuanced. SEC Chairman Paul Atkins, a crypto-friendly official appointed by Trump, emphasized in recent meetings that to foster innovation, investment, and employment in the U.S., compliant pathways must be provided to allow market participants to leverage the unique capabilities of new technologies. This stance stands in stark contrast to former Chairman Gary Gensler’s tough enforcement approach.

However, outgoing Democratic Commissioner Caroline Crenshaw warned that “wrapped securities” tokenized products marketed as such are often not one-to-one replicas of underlying assets, and may carry risks such as lower liquidity and differences in ownership rights. This warning represents ongoing divisions within the regulatory agency regarding crypto; not all officials support rapid liberalization.

The meeting will be led by Commissioner Hester Peirce, long known as “Crypto Mom” for her supportive stance toward the crypto industry. Peirce has repeatedly criticized the SEC’s enforcement-first regulatory strategy and advocates for guiding the industry through clear rulemaking rather than punishing after the fact through litigation. Her leadership of the roundtable may signal a relatively friendly attitude.

Although the SEC stresses that this event is not intended to immediately issue new rules, the market generally believes that the discussions will directly influence regulatory policies in early 2026 and beyond. The roundtable’s conclusions and consensus will serve as an important reference for future rulemaking, and the statements and positions of participants may also impact the legislative process.

Grayscale Zcash ETF Application and the Prospects for Privacy Coins

Market demand for privacy technology is growing significantly. On the eve of the meeting, Grayscale Investments submitted an ETF registration application for Zcash ($ZEC) to the SEC at the end of November. The company noted that investors are increasingly demanding cryptocurrencies with privacy features, and Zcash will become an important choice for portfolio diversification.

The timing of this application is highly strategic. Grayscale’s decision to submit the Zcash ETF application just before the SEC roundtable clearly aims to position Zcash positively as regulators discuss privacy coin policy. If the roundtable signals support for privacy technology, the chances of the Zcash ETF being approved will increase significantly. Conversely, if the meeting leans toward strict regulation, Grayscale’s application could face major obstacles.

The guest list for the roundtable has drawn significant attention from the community, with Zcash founder Zooko Wilcox set to attend in person. In addition, experts from Aleo Network Foundation, Digital Asset, and the American Civil Liberties Union (ACLU) will participate in the discussions. The presence of these privacy advocates and regulators together suggests that discussions on zero-knowledge proofs and non-custodial applications will go in depth.

Currently, most exchanges use complex tracking systems to identify fraud, but critics point out that some tools collect far more information than necessary, potentially hindering technology adoption. The SEC admits that poor data protection could erode market trust, and therefore seeking a “middle ground” between regulation and technology is crucial. This statement suggests the SEC may not pursue a blanket ban, but rather seek a balance between privacy protection and regulatory needs.

Citadel and U.S. Exchanges Face Off

At a recent SEC Investor Advisory Committee meeting, tensions between traditional financial giants and crypto-native firms came to the fore. BlackRock Senior Managing Director Samara Cohen noted that there are starkly different perspectives among committee members, reflecting current market challenges, but also hinting that there may be more than one solution.

The flashpoint of the controversy stems from Citadel Securities’ hardline stance. This major market maker argues that the SEC should impose stricter rules on DeFi protocols involving tokenized U.S. stock trading, and should not allow them to circumvent the statutory definitions of “exchange” or “broker-dealer.” Citadel’s concerns are real: if DeFi protocols can offer the same services as traditional exchanges without the same regulatory constraints, this would create an unfair competitive environment.

The rebuttal from the largest U.S. compliant crypto exchange is equally forceful. Bauguess emphasizes that the technical architecture of DEXs is fundamentally different from centralized exchanges. Traditional exchanges control client assets, handle order matching and settlement, and therefore must bear corresponding regulatory obligations. In contrast, DEXs only provide smart contract protocols; users control their own assets, and the protocol itself does not hold or control any funds. Imposing the traditional regulatory framework on DEXs is technically infeasible because decentralized protocols lack a central entity to conduct KYC or monitor suspicious transactions.

The outcome of this debate will determine the future of the DeFi industry. If the SEC adopts Citadel’s recommendations, most DEXs may be forced to block U.S. users or convert to permissioned protocols, fundamentally changing the decentralized nature of DeFi. If the SEC accepts the arguments of the largest U.S. compliant crypto exchange, DeFi will enjoy a relatively relaxed regulatory environment but may have to meet some regulatory requirements through other means (such as compliance tools at the protocol level).

Analysts believe that the SEC’s guidance in this industry will directly determine the growth rate of the RWA market and whether the U.S. can maintain global competitiveness in the asset tokenization industry. As the December 15 roundtable approaches, the market is anxiously awaiting how the SEC will set the tone for future financial regulation, balancing consumer protection and innovation. The warnings from outgoing commissioners show that even under the Trump administration’s crypto-friendly policy, there are voices within the SEC advocating for caution.