Hester Peirce said crypto vaults require case-by-case review because their structure determines whether securities laws apply. Peirce said onchain lending strategies may trigger SEC oversight
SEC Commissioner Hester Peirce said some crypto vaults and onchain lending strategies could fall under federal securities laws, depending on their structure and operation. In a statement published on July 22, Peirce said blockchain technology does not automatically remove financial activities from SEC oversight. Instead, each product requires a fact-specific legal review.
According to Peirce, crypto vaults differ widely in design and management. Some rely entirely on immutable smart contracts, while others allow individuals or groups to make allocation decisions.
She said vault managers should assess whether selecting yield strategies, reallocating assets, or appointing decision-makers brings their activities under federal securities laws. Additionally, vaults investing in securities could raise investment company questions.
Peirce explained that some vaults may resemble unit investment trusts because they hold fixed portfolios with limited management. Others may operate more like management investment companies or separately managed accounts.
She also repeated a position outlined last year. According to Peirce, moving securities-related activities onto blockchain networks does not remove them from existing securities laws.
Peirce said onchain lending strategies require similar legal analysis. Managers who determine interest rates, supported assets, loan-to-value limits, or liquidation thresholds should examine whether securities laws apply.
She added that certain onchain loans could share characteristics with securities. According to Peirce, regulators would evaluate factors including participant motivations and how those loans are distributed.
Furthermore, she said people managing vaults or lending strategies could face investment adviser obligations. However, every assessment depends on the specific facts surrounding each product.
Peirce encouraged crypto developers and market participants to engage directly with the SEC while designing vaults or facilitating onchain lending. She said some projects may fall outside the agency's jurisdiction, while others may require compliance discussions.
She also invited feedback on whether existing SEC rules should change to accommodate vaults, onchain lending, and related innovations. According to Peirce, Congress designed securities laws to remain flexible as technology evolves.
At the same time, she said any regulatory analysis must respect congressional limits on SEC authority. She also emphasized protecting developers' free speech rights while evaluating blockchain-based financial products.
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