Veda, Aave Labs and Kamino Foundation publish legal framework summary on DeFi lending and non-custodial vaults
Veda said on Nov. 3 that it, Aave Labs and the Kamino Foundation have released a public summary of a legal framework examining how U.S. federal securities laws may apply to decentralized lending protocols and non-custodial vaults. The group said it submitted a more detailed version to the U.S. Securities and Exchange Commission on Oct. 26 and asked to speak with agency staff. According to Aave Labs, the full submission was sent to the SEC Crypto Task Force and the Division of Corporation Finance, while the complete filing remains confidential. The document analyzes the issue through the Howey investment contract test, the Reves note test, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. It argues that, under the structures described, the protocols and vault arrangements reviewed do not constitute investment contracts or notes, the vaults described are not investment companies, and compensated investment discretion does not necessarily amount to custody of client assets. Veda added that those conclusions depend on the specific architecture, contractual arrangements, and allocation of rights and powers described in the paper.
