Securities and Exchange Commission (SEC), Crypto Task Force leader, Commissioner Hester PeirceHe made a statement on “c”.crypto vaults and lending strategies.” Briefly, the Commissioner touches on the changing and changing strategies that crypto holders use to generate returns.
Expanding on an earlier statement that tokenized securities remain securities, Commissioner Peirce explains that these return strategies likely involve federal securities laws.
The commissioner says:
“For example, a vault may be a shared entity in which users deposit money in anticipation of a reasonable profit from the entrepreneurial or managerial efforts of the vault distributor and curator. A vault that holds securities or allocates assets to securities investments may fall within the realm of investment company. Some vaults may function similarly to unit investment trusts, holding a fixed portfolio of assets with little or no active management; others may function similar to management investment companies; and still others may more closely resemble individually managed accounts that provide individualized client service. Debt Issuance strategies may also have significant federal securities law implications that do not affect the underlying assets. For example, on-chain loans may have characteristics of securities that are securities, depending on the motivations of the parties, the distribution plan, and other relevant factors. These issues require respect for the limits set by Congress on our jurisdiction and an unwavering commitment to protecting the free speech rights of developers.”
While the statement acknowledges the benefits of digital asset innovation, it carries an element of frustration as innovators seek to push the boundaries of what a security is and when it is. The statement also highlights the difficulties in updating the rules for the digital asset ecosystem.
Commissioner Peirce seeks feedback from industry participants and once again notes that adapting to innovation is often paired with investor protections (when covered by security law).
