The U.S. Securities and Exchange Commission said certain activities tied to crypto Vaults and on-chain lending may raise issues under federal securities laws. In a statement, the agency said Vaults that use smart contracts to allocate user assets into yield strategies such as staking and lending could involve regulated management activity, depending on how those products are structured and operated.
The SEC said parties involved in managing a Vault should assess whether their conduct falls within securities regulation. It specifically pointed to selecting yield strategies, reallocating funds across yield-bearing assets, and choosing managers responsible for investment decisions. The agency also flagged participants involved in running lending strategies, including those who set interest rates, decide which assets are supported, establish loan-to-value, or LTV, limits, and define liquidation standards.
The statement added that on-chain lending strategies may also present material securities-law questions. Depending on participant motivation, how products are distributed, and other relevant factors, on-chain loans could in some cases resemble securitized debt instruments, or notes. The SEC said it is seeking public input on whether existing rules should be revised to accommodate Vaults, on-chain lending, and other innovations while still protecting investors, maintaining fair, orderly, and efficient markets, and supporting capital formation.
Odaily reported that the U.S. Securities and Exchange Commission said in a statement that Vaults, which use smart contracts to allocate user assets into yield strategies such as staking and lending, may involve activity subject to securities regulation.
The SEC said parties involved in managing a Vault should evaluate whether their conduct falls under federal securities laws. The statement highlighted several examples, including selecting yield strategies, reallocating funds across different yield-bearing assets, and choosing managers responsible for investment decisions.
Lending strategy management was also singled out
The agency said entities involved in managing these lending strategies should also analyze whether their actions raise issues under federal securities laws.
- Setting interest rates
- Deciding which assets are supported
- Establishing loan-to-value, or LTV, limits
- Defining liquidation standards
SEC says on-chain lending may also raise securities-law questions
The statement said on-chain lending strategies may also involve significant securities-law issues. Depending on participant motivations, product distribution methods, and other relevant factors, on-chain loans may have characteristics of securitized debt instruments, or notes.
Agency invites market feedback
The SEC said it welcomes comments from market participants, including on whether existing rules should be modified to accommodate Vaults, on-chain lending, and other innovations, and how to support innovation while protecting investors, ensuring markets remain fair, orderly, and efficient, and promoting capital formation.
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