The US Securities and Exchange Commission (SEC) has signaled that one of the fast-growing sectors of decentralized finance may be subject to greater regulatory scrutiny.
In a statement Wednesday, Commissioner Hester Peirce said crypto vaults and onchain lending strategies may fall under federal securities laws depending on how they are structured and managed.
While many crypto activities are outside the SEC’s jurisdiction, she cautioned that moving them on blockchain rails does not automatically change their legal status.
“Tokenized securities are still securities,” Peirce said, echoing her earlier remarks. “That principle applies to vaults.”
“If you do headstands, backwards and other gymnastics to read the law so that it does not apply to crypto assets and activities that are well within the ambit of the federal securities laws, you will be in for a painful fall,” she added.
Her comments rippled across the crypto market. one of the largest providers of vault infrastructure, fell approx. 5% after the statement, which underperformed the broader crypto market.
Vaults have become one of DeFi’s fastest-growing products by allowing users to deposit crypto into smart contracts that automatically allocate capital across loan markets and other return-generating strategies. Users receive returns, while the box’s rules, or in some cases professional managers known as vault curators, decide where the funds are spent.
