Earlier this week, SEC Commissioner Hester Peirce published a statement saying crypto vaults and onchain lending strategies may already fall within federal securities laws. Moving an activity onchain does not, as a general matter, take it outside those laws, she wrote. Anyone doing "headstands, backflips, and other gymnastics to read the law so that it does not apply" to activities within its scope "will have a painful fall."
Peirce set out several ways the laws could apply. A vault could be a common enterprise in which users invest money expecting profits from the efforts of its deployer and curator. A vault that holds securities, or allocates assets to securities, could fall under investment company laws. Depending on how it operates, a vault could resemble a unit investment trust, a management investment company, or a separately managed account (which all require different levels of SEC registration). Onchain loans could also be notes that are securities, while managing vaults or lending strategies may raise investment adviser issues.
Whether any of these laws apply "will come down to the specific facts and circumstances," Peirce wrote. She invited firms to come and talk. The statement is not a rule or an enforcement action, and Peirce spoke only for herself, not the Commission. But it marked the second time in three months that SEC leadership had publicly addressed vaults.
