Pretty Good Policy for Zcash urges SEC to allow selective disclosure in token fundraising rules

A privacy-focused policy group is pushing the SEC to let cryptocurrency token issuers prove their fundraising claims without exposing their full financial histories, testing SEC Chairman Paul Atkins’s stated commitment to balancing investor protection with financial privacy. The request arrives as regulators finalize rules that will govern how startups disclose token economics and insider holdings.

• Pretty Good Policy for Zcash submitted an Oct. 20 comment asking the SEC to allow accounting records and cryptographic proofs as alternatives to complete wallet exposure.
• The proposed Regulation Crypto Assets would create a $5 million startup exemption and a $75 million fundraising exemption from securities registration, with tailored disclosure rules.
• Chairman Atkins has publicly endorsed zero-knowledge proofs, selective disclosure, and wallet designs as tools for demonstrating compliance without surrendering entire financial histories.

• $5 million Maximum offering size under the proposed startup exemption over four years
• $75 million Maximum offering size under the proposed fundraising exemption over 12 months
• Aug. 18 Date the SEC issued the proposed Regulation Crypto Assets rule text
• Oct. 20 Comment deadline that has now passed for the proposed rule

According to reporting by CryptoSlate, Pretty Good Policy for Zcash (PGPZ) has filed a detailed comment with the SEC arguing that token issuers should be able to substantiate their fundraising claims without exposing unrelated wallet activity. The group contends that proving a transaction complies with network rules does not establish how an issuer actually deployed investor capital, and that accounting records or other financial evidence may still be necessary. The comment marks a concrete test of remarks made by Chairman Atkins on Dec. 15, in which he described privacy-enhancing technologies as essential tools for compliance verification while protecting unrelated financial activity.

PGPZ requests selective disclosure instead of complete wallet histories

PGPZ’s Oct. 20 submission isolates a narrower issue within the proposed rule: how much underlying financial activity must become visible to make an issuer’s account meaningful to investors. The group argues that issuers should be permitted to use accounting records, cryptographic proofs, and selective disclosure of relevant records rather than exposing complete transaction histories. Issuers would explain what the chosen verification method confirms and its limitations.

The group distinguishes between what investors need in public disclosures and supporting records that an auditor or regulator may examine separately. This approach would preserve applicable audit standards while protecting unrelated financial activity from public exposure. PGPZ warns that a single cryptographic key can expose extensive financial activity even though it cannot spend funds, and asks the SEC for narrower evidence requirements instead of making key access the default.

PGPZ accepts aggregate amounts and narrative descriptions where they adequately explain holdings, relationships and transactions, provided they do not conceal material concentrations, preferential terms, or conflicts.

Atkins frames privacy as central to balancing national security with civil liberties

In his Dec. 15 remarks, Chairman Atkins described crypto as a forcing function for rethinking financial surveillance in the digital age. He noted that public blockchains are more transparent than any legacy financial system ever built, with every transaction visible on a ledger that chain analytics firms can use to link on-chain activity to off-chain identities. He warned that if regulators treat every wallet like a broker, every software tool as an exchange, and every transaction as reportable, the government could transform the ecosystem into a financial panopticon.

Shielding the lawful activity of our citizens from bulk surveillance while still ensuring that our government can perform these essential functions is the best way to protect both national security and our basic civil liberties, while also giving room for innovation to flourish.

Paul Atkins, SEC Chairman

Atkins emphasized that crypto enables privacy-preserving tools the analog world could not provide, including zero-knowledge proofs, selective disclosure, and wallet designs that allow users to prove compliance without handing over their entire financial history. He argued that complete financial transparency could disincentivize important market activity and expose institutional strategies to front-running and manipulation. He expressly stated that the views he expressed were his own and not necessarily those of the SEC as an institution or of the other Commissioners.

The SEC’s final rule will show how far the Commission carries privacy principles into practice

The proposed Regulation Crypto Assets, issued on Aug. 18, would create two exemptions from securities registration. The startup exemption covers offerings of up to $5 million over four years, while the fundraising exemption covers up to $75 million over 12 months. Eligible issuers would receive a tailored route around registration, though disclosures and federal antifraud and antimanipulation provisions would still apply. Rule 103 would supply narrative disclosure requirements for issuers using those exemptions, covering material token economics and allocations, intended use of offering proceeds, management, related-person transactions, and conflicts.

Paragraph (b)(7) covers supply, pricing, lockups, distribution methods, related-person holdings, release schedules, token generation and destruction mechanisms, and methods to verify transaction history.

Rule 103(a) would allow disclosures tailored to each issuer’s circumstances, permitting omission where a requirement is inapplicable or responsive information is unknown or not reasonably available. Form 1-CRYPTO Item 15 would permit redaction of required exhibits where disclosure would constitute a clearly unwarranted invasion of personal privacy, with crypto wallet addresses expressly among its examples. PGPZ asks the SEC to apply this privacy protection consistently across Rule 103 disclosures, related forms, and websites. The test is whether founders can protect unrelated financial activity while still giving investors a credible account of their holdings, conflicts, and use of funds. As of Oct. 26, the SEC docket still labels Regulation Crypto Assets a proposed rule, with the Oct. 20 comment deadline now past, leaving final rule adoption pending.

The BlockWest read. PGPZ frames privacy not as a loophole but as a design principle that makes compliance verification work better. The group accepts that material relationships, concentrations, and conflicts must be disclosed; it simply argues the SEC should distinguish between what investors need and what auditors and regulators need to examine separately. This approach assumes audit oversight remains robust and regulators retain access to unredacted records, leaving open the question of whether the SEC’s examination staff will have adequate resources to verify claims against supporting evidence under scale.

The final rule’s treatment of verification methods and privacy protections will show how far the SEC carries Chairman Atkins’s ambition into issuer requirements and whether the Commission adopts PGPZ’s request for express permission to use accounting records and cryptographic proofs alongside selective disclosure. The agency must also clarify whether Rule 103(b)(7)’s language about verifying transaction history would be satisfied without exposing complete wallet activity, and how it will apply Item 15’s privacy redaction framework consistently across all issuer disclosures and related forms.

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