SEC Commissioner Peirce Warns Crypto Vaults About Lending and Securities Law Regulation

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Golden Finance reports that on July 22, according to the U.S. Securities and Exchange Commission (SEC) website, SEC Commissioner Hester Peirce issued a statement saying that the “on-chain” nature of crypto assets does not automatically exclude related activities from the scope of federal securities laws. The statement notes that crypto vaults and lending strategies that use smart contracts to set up assets on-chain to generate yield—if the parameters such as staking, lending arrangements, interest rates, acceptable assets, LTV ratios, and liquidation thresholds are determined by specific individuals or teams—may constitute a common enterprise, an investment company, or securitized notes, and the relevant participants need to assess whether they may trigger regulatory requirements such as securities issuance and investment adviser rules. Peirce said she welcomes practitioners to communicate with the SEC on compliance pathways and to provide input on how the current rules should be adjusted to accommodate vaults and on-chain lending.
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