Executive Summary
- What’s new: On July 22, 2026, SEC Commissioner Hester M. Peirce issued a statement addressing how the federal securities laws could apply to crypto “vaults” and onchain lending strategies, reiterating that moving activities onchain does not remove them from the scope of securities laws.
- Why it matters: Depending on their design and structure, crypto vaults could raise investment contract or investment company issues, and onchain loans may bear the hallmarks of securities “notes.” Management activities could also raise investment adviser issues for crypto market participants.
- What to do next: Market participants should consider analyzing each layer of a vault or lending strategy separately and identifying who controls asset selection, allocations, interest rates, loan-to-value limits and liquidation thresholds in order to assess the legal implications of each role.
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On July 22, 2026, Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce issued a statement addressing how the federal securities laws could apply to crypto “vaults” and onchain lending strategies.
Commissioner Peirce placed the statement within the SEC’s broader effort to clarify when cryptoassets and activities fall within the securities laws and, when they do, how those laws may apply.
The release reiterates a valuable reminder for crypto participants: Moving an activity onchain generally will not take otherwise regulated conduct beyond the scope of the securities laws.
Crypto Vaults and Lending Strategies
Crypto vaults are tools that use smart contracts to allocate deposited assets among potential yield-generating activities, including staking and lending. Commissioner Peirce emphasized that all vaults are not uniform.
Like many terms in the crypto industry, the term “vault” lacks a specific, widely understood definition, and vault structures and strategies vary today and continue to evolve. Some vaults rely solely on immutable smart contracts, while others may give a person or group, such as a “curator,” discretion over asset allocation.
Parties involved in managing vaults therefore should consider whether their activities implicate the federal securities laws. Relevant activities may include:
- Selecting the yield-generating activities in which a vault participates.
- Reallocating assets among those activities.
- Selecting the parties responsible for making those decisions.
The statement also addresses crypto lending strategies, which accept deposited assets and lend them to borrowers for a fee. Parties managing such strategies may determine interest rates, supported assets, loan-to-value limits or liquidation thresholds. Such functions could also implicate the federal securities laws.
Potential Federal Securities Law Implications
The statement identifies several potential securities law implications, depending on a product’s design, structure and operation.
A vault could be, in the words of Howey, a “common enterprise” in which users “invest money” with “a reasonable expectation of profits derived from the entrepreneurial or managerial efforts” of its deployer and curator (and thus, the offer constitutes an “investment contract”).
A vault that holds securities or allocates assets to investments in securities could also enter what Commissioner Peirce described as “investment company territory.” Depending on its structure, it may resemble a unit investment trust, a management investment company or a separately managed account.
Lending strategies may also present securities issues that do not depend on the nature of the assets being lent. Commissioner Peirce observed that an onchain loan may, depending on the parties’ motivations, the plan of distribution and other relevant factors, bear the hallmarks of “notes” that are securities.
Involvement in managing either vaults or lending strategies may also implicate investment adviser issues. Ultimately, whether a particular vault or lending strategy falls within the federal securities laws will depend on its specific facts and circumstances.
Takeaways
Commissioner Peirce’s statement reflects the balance in the SEC’s evolving approach to digital assets. In recent months, the SEC has determined that many cryptoassets and activities fall outside the federal securities laws. And, with respect to vaults and onchain lending, she has recognized them as potentially efficient, inexpensive tools for generating income and managing investment portfolios.
However, as Commissioner Peirce warned, “[m]oving activities that fall within the scope of the federal securities laws onchain, as a general matter, does not take those activities outside the scope of the laws the Commission administers.”
Market participants should consider analyzing each layer of a vault or lending strategy separately. The status of an underlying cryptoasset may not resolve the treatment of the broader product or transactions involving that asset. And just because that asset may not be a security does not mean the vault or lending strategy cannot implicate the securities laws.
For example:
- A vault may raise investment contract or investment company issues.
- An onchain loan may independently bear the hallmarks of a note that is a security.
- Management activities may separately raise investment adviser issues.
The analysis should therefore account not only for the assets involved but also for the product’s structure, the transactions it facilitates and the functions each participant performs.
Commissioner Peirce’s spectrum between immutable automation and human discretion also offers a useful framework for evaluating product design. Participants should consider identifying who controls asset selection, allocations, interest rates, supported assets, loan-to-value limits and liquidation thresholds. They should then assess the legal implications of each role.
Although the SEC’s posture toward crypto products and activities has been more favorable under the current administration, that posture does not eliminate the need for careful securities law analysis. A prudent approach for industry participants would be to continually evaluate whether their activities implicate the securities laws, and structure and operate their products in ways that mitigate securities risks that may arise now or in the future.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.