SEC Commissioner Hester Peirce Warns That Crypto Vault and Lending Strategies May Fall Under Securities Laws

Odaily Planet Daily News: SEC Commissioner Hester Peirce issued a statement noting that "tokenizing" crypto assets on-chain does not automatically exclude related activities from the scope of federal securities laws. The statement points out that crypto vaults and lending strategies that use smart contracts to allocate assets on-chain to generate returns, where specific individuals or teams determine staking, lending allocation, interest rates, acceptable assets, LTV ratios, and liquidation thresholds, may constitute common enterprises, investment companies, or securitized notes. Relevant participants need to assess whether they are triggering regulatory requirements related to securities offerings or investment advisors. Peirce stated that industry participants are welcome to engage with the SEC regarding compliance pathways and to provide input on how existing rules could be adjusted to accommodate vaults and on-chain lending.