U.S. SEC Commissioner Hester Peirce cautioned that crypto vaults and on-chain lending strategies are not automatically exempt from federal securities laws simply because they operate on blockchain networks.
In a statement titled "Headstands and Summervaults: A Statement on Crypto Vaults and Lending Strategies" on July 22, Peirce said developers should avoid trying to reinterpret securities laws to fit decentralized finance products and instead work with regulators when their activities fall within the SEC’s jurisdiction.
Peirce added that the SEC has spent the past 18 months clarifying that many crypto assets and activities are not securities but emphasized that this does not place every blockchain-based product outside the agency’s oversight.
"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," she wrote.
She reiterated a principle outlined in an earlier statement that moving financial activity on chain does not change its legal status.
