SEC Commissioner Hester Peirce Warns Crypto Vaults and Lending Strategies May Trigger Securities Law Oversight

Odaily Planet Daily News: SEC Commissioner Hester Peirce issued a statement noting that moving crypto assets "on-chain" does not automatically exclude related activities from the scope of federal securities laws. The statement pointed out that crypto vaults and lending strategies that use smart contracts to allocate assets on-chain to generate returns, if specific individuals or teams determine staking, lending allocation, interest rates, acceptable assets, LTV ratios, and liquidation thresholds, may constitute a common enterprise, an investment company, or a securitized note. Relevant parties need to assess whether they touch upon regulatory requirements such as securities offerings or investment advisors. Peirce stated that she welcomes practitioners to communicate with the SEC regarding compliance pathways and to provide comments on how current rules could be adjusted to accommodate vaults and on-chain lending.