SEC’s Pierce warns some DeFi vaults, onchain lending may fall under securities laws

The U.S. Securities and Exchange Commission (SEC) has signaled that one of decentralized finance’s fast-growing sectors could face greater regulatory scrutiny.

In a statement Wednesday, Commissioner Hester Peirce said crypto vaults and onchain lending strategies may fall under federal securities laws depending on how they are structured and managed.

While many crypto activities lie outside the SEC’s jurisdiction, she cautioned that moving them onto blockchain rails does not automatically change their legal status.

“Tokenized securities are still securities,” Peirce said, echoing her earlier remarks. “That principle holds for vaults.”

“If you do headstands, backflips and other gymnastics to read the law so that it does not apply to crypto assets and activities that are well within the scope of the federal securities laws, you will have a painful fall,” she added.

Her comments rippled across the crypto market. MORPHO$1.9614, one of the largest providers of vault infrastructure, fell roughly 5% following the statement, underperforming the broader crypto market.

Vaults have become one of DeFi’s fastest-growing products by allowing users to deposit crypto into smart contracts that automatically allocate capital across lending markets and other yield-generating strategies. Users receive returns while the vault’s rules, or in some cases professional managers known as vault curators, determine where funds are deployed.