SEC’s Peirce Says Crypto Vaults, Lending Services May Fall Under Securities Laws

Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, said crypto vault and lending services may be subject to securities laws.

In a statement issued on July 22, Peirce said certain crypto lending and vault services could fall under federal securities laws.

The principle that tokenized securities remain securities also applies to crypto vaults, she wrote. Like many other new technologies in crypto, the term "vault" lacks a clear, widely accepted definition, and its functions and operating strategies are evolving quickly. Vaults that allocate assets by holding or investing in securities could also qualify as investment companies.

Crypto lending services may intersect with federal securities laws in several ways, according to Peirce. On-chain loans can have the characteristics of notes that qualify as securities, depending on the purpose of the parties to the transaction, how they are offered and distributed, and other relevant factors. Activities involved in managing vaults and lending strategies may also raise regulatory issues related to investment advisers.

Whether a specific vault or lending strategy is subject to federal securities laws ultimately depends on the facts and circumstances of each case, she added. Peirce said she welcomes inquiries from market participants that design or operate vaults or support on-chain lending.