SEC Warns Crypto Developers Against 'Gymnastics' with Securities Laws

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has issued a warning to crypto developers about trying to reinterpret securities laws to fit decentralized finance products.

In a statement titled 'Headstands and Summervaults: A Statement on Crypto Vaults and Lending Strategies' released on July 22, Peirce emphasized that crypto vaults and on-chain lending strategies are not automatically exempt from federal securities laws simply because they operate on blockchain networks.

'If you do headstands, backflips, and other gymnastics to read the law so that it does not apply to crypto assets and activities that are well within the scope of the federal securities laws, you will have a painful fall,' Peirce wrote.