SEC Commissioner Hester Peirce, also known as “Crypto Mom,” has said that crypto vaults and onchain lending strategies may come under US federal securities laws. Peirce’s remarks have started a fresh debate on how decentralized finance (DeFi) products should be treated under US law, according to the SEC Commissioner’s statements.
Peirce has long asked the US Securities and Exchange Commission (SEC) to give clear rules for cryptocurrencies and digital assets. She explained her overall approach to crypto regulation in a February statement called “The Journey Begins”. Her latest comments expand that discussion to DeFi products that help users earn returns, according to Peirce’s regulatory views.
Why the SEC is looking at DeFi Vaults
A crypto vault is a tool that automatically manages users’ crypto and tries to earn profits for them. Onchain lending allows people to lend their crypto through blockchain-based platforms and earn interest or yield. Both products involve pooling user funds or generating returns, which is why regulators are paying close attention.
US securities laws often examine products that look like investment contracts. Regulators believe some DeFi products may look similar to these investment contracts, even if they are run by smart contracts instead of traditional companies, according to the Kucoin report.
Peirce’s comments do not mean crypto vaults or lending products have been declared illegal. Instead, regulators may check whether these products meet the legal tests used to decide if something is a security. If a product is classified as a security, it may have to follow registration, disclosure, and investor protection rules.
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SEC wants industry feedback
In February, Peirce also asked the crypto industry to share its views on how digital asset activities should be regulated, according to her request-for-information statement, noted by Kucoin. The SEC is still collecting opinions, showing that the legal status of many DeFi products has not been fully decided yet.
Peirce has repeatedly said that crypto regulation should be clear instead of relying only on enforcement actions. She has also suggested ideas such as a “mirror token” framework to create rules that better fit digital assets.
What this means for crypto companies
Crypto companies may need to think carefully about how they design their DeFi products. Regulators could look at how user money is pooled, how returns are generated, and how profits are advertised before deciding if a product is a security, according to the Kucoin report. These decisions could affect whether companies must follow extra compliance and disclosure requirements.
US crypto rules are still changing
Peirce’s comments come as the SEC is working on new rules for onchain finance and AI-powered financial products. SEC Chair Paul Atkins has already signaled that the agency is preparing new regulations for onchain and AI-driven finance, according to Kucoin. Those upcoming rules will help decide how Peirce’s warning will be applied in practice.
The SEC is still deciding which crypto activities should be treated as securities and which should not. The agency has already said that staking, airdrops, and crypto mining are generally not considered securities. However, crypto vaults and onchain lending strategies remain an open question, and the industry is still waiting for clearer rules. Peirce’s latest comments show that DeFi products offering investment-like returns could face closer regulatory scrutiny in the future.
