Aave CEO welcomes end of U.S. SEC probe…DeFi regulatory pressure eases for now

A lengthy investigation by the U.S. Securities and Exchange Commission (SEC) into Aave, a leading decentralized finance (DeFi) protocol, has ended. With years of regulatory uncertainty alleviated, it is being interpreted as a signal of a shift in the regulatory stance toward the DeFi industry as a whole.

On the 16th (local time), according to The Block, Aave CEO Stani Kulechov said on social media platform X that the SEC has concluded its roughly four-year investigation into the Aave protocol. He said DeFi has faced unfair regulatory pressure in recent years and that it has now entered a new phase of building the future of finance, leaving that behind.

Aave Labs also officially confirmed the end of the investigation. An Aave Labs spokesperson told The Block that this outcome is the first investigation closure that Aave Labs has publicly confirmed, that years of consultations with regulators have concluded, and that they can now clearly disclose the results.

The August 15 letter released by CEO Kulechov stated that the SEC decided not to recommend enforcement action against the Aave protocol. The document also included mention of a Wells Notice, the SEC procedure that notifies a party of potential violations.

The SEC has generally maintained a position of neither confirming nor denying the existence of investigations into specific companies. However, there is an assessment that its regulatory approach toward the crypto industry has begun to change recently.

Earlier this month, Ondo Finance also announced that an SEC investigation that began during the Biden administration had ended. In the past, the SEC has taken successive enforcement actions against major firms over issues such as unregistered operations by crypto asset companies, but recently it has shown signs of a shift in stance, such as withdrawing some cases and forming a dedicated task force.

Market observers say that the end of the Aave investigation could be a signal of reduced regulatory uncertainty for DeFi overall. However, there remains the possibility that the regulatory environment could change again depending on future legislative and policy directions, so tensions in the industry have not been completely relieved.