SEC Warns Crypto Vaults and On-Chain Lending May Fall Under Federal Securities Laws

The US Securities and Exchange Commission (SEC) has sent a warning to the DeFi industry, stating that certain crypto vaults and on-chain lending products may fall under federal securities laws.

According to SEC Commissioner Hester Peirce, existing securities laws do not become inapplicable simply because investment activity is carried out on a blockchain network.

The focus is on crypto vaults that have spread rapidly in the DeFi market. Vaults are services that generate returns by automatically executing various on-chain strategies such as staking, lending and providing liquidity after users deposit digital assets.

Pierce explained that differences in operating methods could be central to regulatory determinations. If human discretion materially intervenes, it is necessary to examine whether the activity is subject to federal securities laws.