SEC Commissioner Peirce Issues Statement: Crypto Vaults and On-Chain Lending Strategies May Be Regulated Under Federal Securities Laws
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SEC Commissioner Peirce Issues Statement: Crypto Vaults and On-Chain Lending Strategies May Be Regulated Under Federal Securities Laws
According to the SEC official website, Commissioner Hester M. Peirce issued a statement on July 22 highlighting the intersection of crypto vaults (Vaults) and on-chain lending strategies with federal securities laws. Peirce pointed out that migrating activities on-chain does not automatically exempt them from the scope of securities law regulation. Crypto vaults allocate user assets to yield activities such as staking and lending through smart contracts. If their managers engage in activities such as selecting yield strategies or reallocating assets, this may trigger securities law compliance obligations; some vault structures may be deemed common enterprises or fall within the regulatory scope of investment companies. Regarding on-chain lending strategies, managerial actions such as setting interest rates, asset eligibility, and liquidation thresholds may similarly implicate securities laws, and relevant loans may be deemed notes of a securities nature under certain conditions. Peirce stated that the SEC welcomes proactive communication from market participants in the vault and on-chain lending sectors and is soliciting opinions from all parties to explore whether rules need to be revised to accommodate innovation while protecting investors.
Navigating Web3 tides with focused insightsTechFlow News, July 22. According to the SEC website, Commissioner Hester M. Peirce issued a statement on July 22, providing guidance on the intersection of crypto vaults (Vaults) and on-chain lending strategies with federal securities laws.
Peirce noted that moving activities on-chain does not automatically exempt them from the scope of securities law regulation. Crypto vaults allocate user assets to yield-generating activities such as staking and lending via smart contracts. If their managers engage in behaviors such as selecting yield strategies or reallocating assets, it may trigger securities law compliance obligations; some vault structures may be deemed common enterprises or fall within the regulatory category of investment companies. Regarding on-chain lending strategies, management behaviors such as interest rate setting, asset eligibility, and liquidation thresholds may also involve securities laws, and relevant loans may be deemed notes constituting securities under certain conditions.
Peirce stated that the SEC welcomes market participants in the vault and on-chain lending sectors to proactively engage, and is soliciting opinions from all parties to explore whether rules need to be revised to allow room for innovation while protecting investors.
