On July 22, 2026, U.S. Securities and Exchange Commission ("SEC") Commissioner Hester M. Peirce, who leads the agency's Crypto Task Force, issued a statement titled "Headstands and Summervaults: A Statement on Crypto Vaults and Lending Strategies."1 The Vaults Statement addresses a growing corner of decentralized finance: vaults, which Commissioner Peirce describes as arrangements that "facilitate asset deployment by using smart contracts to allocate user assets to various yield-generating activities, including staking and lending."
The Vaults Statement's central message is that moving an activity that otherwise falls within the federal securities laws onchain generally does not take that activity outside those laws, and that vault arrangements and onchain loans can implicate the federal securities laws in numerous ways depending on how they are structured.
We recommend that vault deployers, curators, and the platforms that provide or help users create vault strategies confirm their legal analyses, review their user agreements and other contracts, and consider with counsel whether engagement with the Crypto Task Force makes strategic sense.
What the statement says about vaults
Commissioner Peirce observes that vaults fall along a spectrum from programmatic allocations determined solely by immutable smart contracts to allocations at the sole discretion of another person or group of persons. Where a particular arrangement sits on that spectrum is an important fact, particularly for the investment contract and investment adviser analyses, but is not dispositive under every applicable framework. The Vaults Statement identifies four principal legal issues, each framed in expressly conditional terms:
- "Investment contract" analysis. An offer or sale of an interest in, or participation through, a vault could involve a common enterprise in which users invest money with a reasonable expectation of profits to be derived from the vault deployer's and curator's entrepreneurial or managerial efforts, a formulation drawn from United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975), which the Vaults Statement specifically cites.2 Uncertainty about a vault's investment contract status arises because vault designs vary widely in how much ongoing human management they involve, and there is little guidance addressing allocations performed entirely by autonomous code. If the vault participation arrangement, receipt token, or other user interest is an investment contract, the offer and sale of that interest would be subject to the registration or exemption requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act"). Permissionless access and unrestricted transfers may make reliance on conventional exemptions operationally difficult or impossible.3
- Onchain loans as "notes." In addition to investment contracts, the statutory definition of "security" includes "any note." Reves v. Ernst & Young, 494 U.S. 56 (1990), establishes a rebuttable presumption that a note is a security, subject to its so-called "family-resemblance" analysis. Among other things, the relevant instrument must first be identified, such as a borrower's repayment obligation, a lender participation or receipt token, or another pooled claim. Reves also considers the parties' motivations, the plan of distribution, the reasonable expectations of the investing public, and whether another regulatory scheme or risk-reducing factor makes application of the securities laws unnecessary.4 How that multi-factor analysis applies to lending conducted through pooled, automated protocols remains unsettled. If the identified instrument is a security, its issuer and any person offering it must consider Securities Act registration or exemption requirements discussed above.
- Investment company status. A vault arrangement involving an issuer that holds securities or allocates assets to investments in securities may satisfy one of the Investment Company Act's Section 3(a) tests, unless an exclusion or exemption applies. The Vaults Statement notes that particular designs may resemble unit investment trusts or management investment companies, while an individualized account arrangement may instead resemble a separately managed account. Characterization of an issuer as an investment company would be especially challenging for providers because operating a permissionless onchain vault within the registered investment company framework would raise substantial structural and compliance questions, while whether a given vault's underlying assets are even securities is often itself unsettled. This characterization has the potential to make the U.S. Investment Company Act of 1940, including its registration, governance, custody, valuation, liquidity, capital-structure, distribution, and affiliated-transaction provisions, an operative constraint on vault design.
- Investment adviser status. The Vaults Statement adds in a single sentence that "[i]nvolvement in managing vaults and lending strategies also may implicate investment adviser issues." However, that sentence deserves particular attention for projects marketing vaults whose allocations are curated by artificial intelligence systems rather than determined entirely by immutable code. The Vaults Statement does not mention artificial intelligence, but the analysis it gestures toward does not depend on the technology used. The Investment Advisers Act of 1940, as amended (the "Advisers Act"), generally defines an investment adviser as "any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities." Where vault assets include securities and a deployer or curator earns fees for allocation decisions, interposing an AI model between the operator and the allocation does not definitively remove the operator from that definition. A key question is which natural person or company provides, controls, adopts, markets, or receives compensation for the model's securities-related advice. Existing robo-adviser guidance supports the conclusion that algorithmic delivery does not by itself remove advisory activity from the Advisers Act, but it does not squarely resolve a decentralized structure in which model development, deployment, strategy control, governance, client interaction, and fee receipt are divided among multiple actors.5 The SEC has separately shown that it polices claims about AI in advisory services. In March 2024, it settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for false and misleading statements about their use of artificial intelligence.6 AI-curated vaults that hold securities therefore have the potential to present multiple exposures, including adviser registration or exemption, substantive Advisers Act obligations, and marketing liability where AI capabilities are overstated.
Cross-border reach and engagement pathway
The Vaults Statement does not address the territorial application of the federal securities laws. However, domicile alone is not dispositive under U.S. securities laws, and offshore actors must separately consider whether their offers, sales, advisory relationships, and other conduct have a sufficient United States nexus. For offshore operators, one practical question is whether their offers and sales occur in the United States. Under Regulation S, the operative terms of Section 5 of the Securities Act are deemed not to include offers and sales that occur outside the United States, and the safe harbor generally requires an offshore transaction and no directed selling efforts in the United States, together with any applicable category-specific conditions.7 A globally accessible public interface is not automatically a United States offer, but United States-targeted content, known participation by persons in the United States, or inadequate screening and access controls may jeopardize reliance on the safe harbor.
A foreign issuer that would otherwise be an investment company and proposes a public offering in the United States would face additional constraints. For example, Section 7(d) of the Investment Company Act prohibits a foreign investment company from using United States jurisdictional means to offer or sell its securities in connection with a public offering absent an SEC order, which is available only if the SEC finds that effective enforcement of the Investment Company Act against the company is both legally and practically feasible and that issuance of the order is otherwise consistent with the public interest and the protection of investors. Section 7(d) does not, however, categorically bar a properly structured private offering in the United States by a foreign fund, including one relying on Section 3(c)(1) or 3(c)(7), although those exclusions and the related Securities Act exemptions may impose investor-eligibility, ownership, offering, and transfer restrictions that can be difficult to implement for onchain vaults absent specific controls and procedures.8
The investment adviser analysis carries a separate cross-border overlay. A non-U.S. curator that earns fees on a vault holding securities cannot assume that the Advisers Act's cross-border exemptions from registration will be available. The foreign private adviser exemption is confined to an adviser that has no place of business in the United States, has, in total, fewer than 15 clients in the United States and investors in the United States in private funds, has less than $25 million in aggregate assets under management attributable to those clients and investors, does not hold itself out generally to the public in the United States as an investment adviser, and does not advise a registered investment company or business development company.9 An adviser to a vault characterized as a private fund would cease to satisfy the numerical limit when the combined number of the adviser's clients in the United States and investors in the United States in private funds reaches 15, subject to the rule's detailed counting provisions. While pseudonymous participation does not automatically make the exemption unavailable, it would likely make it difficult to determine and document whether participants are investors in the United States, perform the required counting, and calculate attributable assets under management. The private fund adviser exemption offers another exemptive route. For a non-U.S. adviser, it requires that the adviser have no client that is a United States person other than one or more qualifying private funds and that any assets managed at a United States place of business consist solely of private fund assets with a total value below $150 million.10 If the arrangement instead is a collection of separately managed accounts rather than a private fund, the exemption would be unavailable if the adviser has any United States person client through those accounts.
The Vaults Statement closes with the following invitation that is not geographically limited, and we encourage both U.S. and non-U.S. vault curators to consider accepting the invitation:
"We welcome inquiries from market participants involved in designing and operating vaults or facilitating onchain lending. You may not fall within our regulatory scope, but, if you do, we welcome the opportunity to talk with you about how to serve your customers in compliance with the federal securities laws."
Pending legislation would not necessarily moot these questions
On July 22, 2026, the same day the Vaults Statement was issued, Senator Cynthia Lummis released an updated amendment in the nature of a substitute to H.R. 3633, the Digital Asset Market Clarity Act, reflecting the merged work products of the Senate Banking and Agriculture Committees.11 Title III would define a "decentralized finance trading protocol" and require tailored rules for persons controlling a "non-decentralized finance trading protocol" who otherwise are subject to the Exchange Act. Title VI would protect persons from application of the Securities Act or Exchange Act solely based on specified network and software activities and would direct further rulemaking for certain user interfaces, governance systems, messaging systems, liquidity pools, and wallet functions.12 As currently drafted, those provisions would not, in our view, categorically resolve the investment-company, investment-adviser, investment-contract, or Reves questions described above. Title III's relevance would turn in part on whether the arrangement falls within the draft's trading-protocol definitions, while the Title VI protections discussed above are activity-specific and operate principally through amendments to the Securities Act and Exchange Act.
Conclusion
The Vaults Statement does not change the law or represent an official SEC position. It is nevertheless a meaningful signal from the Commissioner who currently leads the Crypto Task Force. One practical takeaway is that builders of vault and onchain lending products should not assume that automation or decentralization, standing alone, defeats a securities characterization. Institutional participants also should not assume the products they access have these questions resolved. Participants with a sufficient United States nexus, including vault deployers, curators, platforms distributing vault strategies, and asset managers allocating client assets to them, should document their analyses under the investment-contract, Reves note, investment-company, and investment-adviser frameworks. For model-directed strategies, the analysis should identify the natural persons and companies that develop, deploy, control, adopt, market, or receive compensation in connection with the model's securities-related outputs, including third-party model providers. Non-U.S. actors should assess United States offering and advisory rules before a United States-facing launch, and participants should consider with counsel whether engagement with the Crypto Task Force is strategically appropriate.
1 Hester M. Peirce, Comm'r, SEC, Headstands and Summervaults: A Statement on Crypto Vaults and Lending Strategies (July 22, 2026), available at https://www.sec.gov/newsroom/speeches-statements/peirce-statement-crypto-vaults-lending-strategies-072226. The statement reflects Commissioner Peirce's individual views and is not a Commission rule, order, interpretive release, or formal Commission position. This briefing is limited to the federal securities law issues identified in the Vaults Statement and does not address commodities, anti-money-laundering, sanctions, money-transmission, state-law, consumer-protection, or tax considerations.
2 See SEC v. W.J. Howey Co., 328 U.S. 293, 298–99 (1946); United Housing Found., Inc. v. Forman, 421 U.S. 837, 852 (1975).
3 If the relevant vault participation arrangement, receipt token, or other user interest is a "security," intermediaries that facilitate secondary transactions in those interests may also need to consider whether their activities implicate the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), including potential broker-dealer registration, national securities exchange registration, or alternative trading system compliance.
4 See Reves v. Ernst & Young, 494 U.S. 56, 63–67 (1990).
5 Investment Advisers Act of 1940 §§ 202(a)(11), 202(a)(16), 15 U.S.C. §§ 80b-2(a)(11), 80b-2(a)(16); SEC Division of Investment Management, Robo-Advisers, IM Guidance Update No. 2017-02 (Feb. 2017), available at https://www.sec.gov/investment/im-guidance-2017-02.pdf.
6 Press Release, SEC, SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence (Mar. 18, 2024), available at https://www.sec.gov/newsroom/press-releases/2024-36.
7 17 C.F.R. §§ 230.901–.903 (2026); Statement of the Commission Regarding Use of Internet Web Sites to Offer Securities, Solicit Securities Transactions or Advertise Investment Services Offshore, Securities Act Release No. 7516, Exchange Act Release No. 39779, Investment Company Act Release No. 23071, Investment Advisers Act Release No. 1710 (Mar. 23, 1998), available at https://www.sec.gov/rules-regulations/1998/03/statement-commission-regarding-use-internet-web-sites-offer-securities-solicit-securities.
8 Investment Company Act of 1940 § 7(d), 15 U.S.C. § 80a-7(d); Goodwin, Procter & Hoar, SEC No-Action Letter (pub. avail. Feb. 28, 1997), available at https://www.sec.gov/divisions/investment/noaction/1997/goodwinprocterhoar022897.pdf.
9 Investment Advisers Act of 1940 §§ 203(b)(3), 202(a)(30), 15 U.S.C. §§ 80b-3(b)(3), 80b-2(a)(30); 17 C.F.R. § 275.202(a)(30)-1.
10 17 C.F.R. § 275.203(m)-1(b).
11 Press Release, Office of Senator Cynthia Lummis, Lummis Releases Updated Clarity Act Text (July 22, 2026), available at https://www.lummis.senate.gov/press-releases/lummis-releases-updated-clarity-act-text/.
12 Digital Asset Market Clarity Act, amendment in the nature of a substitute to H.R. 3633, tit. III, § 10301, and tit. VI, § 10601 (released July 22, 2026), available at https://www.lummis.senate.gov/wp-content/uploads/Clarity-Act.pdf.
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