The United States Securities and Exchange Commission (SEC) has signaled that one of the fast-growing sectors of decentralized finance could face more rigorous regulatory oversight.
In a statement Wednesday, Commissioner Hester Peirce said crypto vaults and blockchain lending strategies may fall under federal securities laws depending on how they are structured and managed.
Although many crypto activities fall outside the SEC’s jurisdiction, she cautioned that moving them onto the blockchain tracks does not automatically change their legal status.
“Tokenized securities are still securities,” Peirce said, echoing his earlier remarks. “This principle applies to safes.”
“If you do handstands, backflips and other gymnastics to read the law so that it does not apply to crypto assets and activities that fall squarely within the scope of the federal securities laws, you will have a painful fall,” she added.
His comments reverberated across the crypto market. one of the largest providers of vault infrastructure, fell around 5% following the statement, underperforming the broader crypto market.
Vaults have become one of the fastest-growing DeFi products by allowing users to deposit cryptocurrencies into smart contracts that automatically allocate capital between lending markets and other yield-generating strategies. Users receive feedback while vault rules, or in some cases professional managers called vault curators, determine where funds are deployed.
