Overview
- SEC Commissioner Hester Peirce said in a July 22 statement that certain crypto vaults and onchain lending strategies may fall under U.S. federal securities laws depending on how they are structured.
- She said key factors for that legal analysis include whether users’ assets are pooled, whether returns depend on the efforts of a curator or manager, and whether investors expect profits from those efforts under the Howey test.
- Peirce warned that putting a product onchain does not change its legal character and repeated that tokenized securities remain securities.
- The guidance had immediate market effects, with Morpho’s token falling roughly 5%, and it follows rapid growth in vaults, which hold about $8.6 billion across hundreds of curated products and are being integrated by brokers and exchanges.
- Peirce emphasized a fact-specific, case-by-case approach rather than blanket prohibitions and invited developers to engage with the SEC as regulators consider targeted rule updates to balance innovation and investor protection.