Peirce Weighs in on Vault and Lending Regulation: Industry Input Sought

SEC Commissioner Hester Peirce has weighed in on the regulatory status of cryptocurrency vaults and onchain lending strategies. In a statement, she highlighted that these structures may fall under federal securities laws when operators make managerial decisions over user assets.

Vaults typically use smart contracts to deploy deposited crypto across staking, lending, and other yield-generating strategies. However, their legal treatment will depend on how much control remains with immutable code and how much is exercised by deployers, curators, or other managers.

Peirce noted that a vault could constitute an investment contract when users contribute assets with an expectation of profits derived from the managerial or entrepreneurial work of another party. She also mentioned that structures holding securities or allocating capital to securities investments could fall under the Investment Company Act.

The SEC is currently seeking industry input on DeFi rules through its Project Crypto initiative, which includes proposals covering trading, custody, token distributions, staking, and lending. Peirce invited vault developers, lending platforms, and other market participants to approach the SEC about compliant structures and submit proposals for updating rules that unnecessarily block onchain products.