SEC Commissioner Warns DeFi Ecosystem: 'Painful Fall' Looms for Crypto Vaults

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has issued a warning to the DeFi ecosystem, stating that crypto vaults and on-chain lending strategies could fall under federal securities laws.

Peirce emphasized that moving an activity onto the blockchain does not exempt it from regulation. She warned that structures attempting to evade the law may ultimately face significant consequences.

The SEC Commissioner stated that crypto vaults, which allow users to profit from a curator's management, could be considered common enterprises. If these vaults hold assets with security characteristics, they are likely subject to traditional investment company laws.

Peirce also mentioned that on-chain loans could be evaluated as securities-like notes, and those managing these strategies may face investment advisory issues.