SEC Commissioner Hester Peirce Issues Warning on Onchain Crypto Vaults and Lending
On July 22, SEC Commissioner Hester Peirce issued a warning that certain crypto vaults and lending platforms may fall under federal securities laws. She emphasized that moving activities onto the blockchain does not exempt them from regulatory obligations such as registration requirements if they resemble investment contracts or mutual funds. Peirce highlighted how active management in onchain yield tools can trigger compliance responsibilities, including those of an investment adviser. Lending strategies also face scrutiny under a 'note test' established by past court rulings. While Peirce acknowledged the potential for these products to become mainstream if built responsibly, she warned against attempts to circumvent regulations. The commissioner invited developers and operators to collaborate with regulators directly rather than risk enforcement actions. Her comments come as part of broader efforts at the SEC to ensure investor protection while considering adjustments that do not stifle innovation.
Topics: crypto regulation decentralized finance (DeFi) investment contracts vaults and lending